DUBAI – Dubai’s economy grew 2.5 percent in the first nine months of 2010, compared with the same period of the previous year, as trade and retail picked up, the head of the Gulf Arab emirate’s statistics office said on Sunday.
Dubai’s debt woes, prompted by the plunge of its property sector, weighed on economic performance across the United Arab Emirates in 2010 as many of the OPEC member’s banks were exposed to state-owned developers that ran into trouble.
But rising trade flows helped fuel economic recovery.
Arif Obaid al-Muhairi, Executive Director at the Dubai Statistics Center, said that wholesale and retail sectors were the main growth drivers, the website www.dsc.gov.ae showed.
He did not say whether the gross domestic product increase was in real or nominal terms.
Last October, Muhairi saw Dubai’s GDP growth at 2.3 percent in 2010, well above a 0.5 percent forecast by the International Monetary Fund.
The economy of the emirate, which accounts for some 80 percent of the UAE non-oil trade, expanded 5.7 percent in real terms in 2008. Official 2009 GDP data for Dubai are not available, although the IMF estimated a 0.9 percent contraction.
Muhairi said on Sunday that transport, storage and telecommunications were the second largest sectors in terms of 2010 growth, up an average of 10 percent in the same period.
The Dubai economy — which accounts for almost a third of the seven-member UAE federation — saw a slight drop in construction and real estate sectors, while the average jobless rate stood at 0.6 percent, he said.
“The first half, maybe the first quarter 2009 was the period when economic activity dipped. Since then there has been a rebound,” said Giyas Gokkent, chief economist at the National Bank of Abu Dhabi.
“You can see that for example in the trade data and … you can also see it when you look at anecdotal evidence in sales activity,” he said.
Trade activity in Dubai, a key trade and tourism gateway to the UAE, has picked up strongly last year with third quarter exports and re-exports up 35 percent and 25 percent, respectively, from the previous year.
Passenger traffic at Dubai’s international airport jumped 15 percent in 2010, while hotel occupancy was up 3.8 percent in January-September.
Concerns about Dubai’s total liabilities, estimated at around $115 billion or some 123 percent of GDP, have eased after state-owned Dubai World sealed a deal last September to restructure almost $25 billion of debt.
But worries still persist about the ability of Dubai and its companies to repay bonds and loans worth billions of dollars in the next four years as the emirate lacks the oil wealth of neighbouring Abu Dhabi.
(Reporting by Martin Dokoupil and Martina Fuchs; Writing by Martin Dokoupil; editing by Sophie Walker)