Dubai’s economy showed promising growth after falling 11% last year

Dubai, United Arab Emirates-According to data from the Dubai Statistics Center, Dubai’s economy has contracted by 10.9% year-on-year in 2020, reflecting the city’s hard hit by the coronavirus pandemic and the suspension of global travel.

Dubai is the commercial capital of the United Arab Emirates with a population of 3.4 million. It is heavily dependent on industries such as hotels, tourism, retail and travel, all of which have suffered a huge global hit in the first year of the pandemic.

There is no doubt that the industries that were hit hardest in Dubai last year were the arts, entertainment and leisure industries (-55%); transportation and storage (-35%); and accommodation and food service activities (-33%).

However, this year’s growth has seen a leap. According to the data in the first quarter of this year, although a year-on-year decrease of 3.7%, it has increased by 11% over the previous quarter.

Compared with the levels in the first quarter of 2020, transportation and warehousing, as well as hotels and restaurants have also declined, which puts pressure on overall growth, as travel and tourism are still below pre-pandemic levels, but the two largest economic sectors ——The wholesale and retail trade and financial services industry grew by 2.8% and 3.5% year-on-year respectively.

Dubai is the leader in reopening the tourism industry in July 2020. After implementing a very strict lockdown, people are restricted to their homes and can only leave with the permission of the police, becoming one of the first cities in the world to reopen the tourism industry. Nightlife and leisure activities resume at the end of summer. Wearing masks and maintaining social distance are still anti-epidemic measures.

In the winter, the emirate became a hotbed for tourists eager to live a normal life, but by February, the surge of Covid infection caused many countries, especially the United Kingdom, to include the UAE on the travel ban list.

The slow recovery of travel and the delayed lifting of travel bans in some countries have been the main sources of pressure for economic recovery.

An analyst at Dubai Bank UAE NBD said: “We expect that from the second quarter of 2021, annual GDP growth will rebound from last year’s low annual base, but global travel restrictions may be smaller in the second and third quarters. To a certain extent, it will affect Dubai’s recovery.” In Monday’s notes. But “these travel restrictions have been relaxed in recent weeks, and we expect growth in the fourth quarter to accelerate,” the bank said.

Emirates NBD predicts that the emirate will grow at 4% this year. As for the UAE as a whole, it predicts that “the entire UAE’s GDP will increase by 1.9% from the previous -6.1% this year.”

With the increase in global travel and one of the fastest vaccination campaigns in the world, the UAE is in a good position to see higher tourist numbers in the winter months of the fourth quarter, warm weather and relaxed Covid. Restrictions are expected to attract tourists from colder coasts. Dubai is pinning its hopes on Expo 2020, whose six-month-long large-scale event has been postponed for one year due to the pandemic and will become a major tourist attraction.

At the same time, the real estate industry, which has been in recession for several years at the beginning of the pandemic, is experiencing a strong but uneven rebound-partly because many market observers criticize overbuilding. Due to the pandemic, the majority of the foreign population in Dubai has fallen by 8.4% in 2020. This is the largest decline in the population of the Gulf region. Therefore, the supply of real estate has become more apparent than the demand.

Residential property prices in Dubai “rebound strongly from their historical lows at the end of 2020-since their peak in 2014-supported by pent-up demand from international and local buyers, improved investor and consumer confidence, and oil rebounds. Natural gas prices, as well as the gradual recovery of the macro economy in Dubai, are supported by high Covid-19 vaccination rates and new visa and company ownership rules,” S&P Global Ratings analysts said in a report on Monday.

In fact, the emirate has introduced visa and business reforms aimed at making it easier for foreigners to live and work in Dubai and fully own their own businesses there without needing a local partner before.

Standard & Poor’s analysts wrote: “Dubai’s real estate industry may benefit from Expo 2020-due to the pandemic, the Expo will begin in late October this year.” “But the structural oversupply of residential properties will challenge price increases in the long term and bring recovery. Become fragile.”