Dubai Economy Remains Attractive For Investments In 2016
- December 22, 2015
- Posted by: RKonnect
- Categories: Business & Economy, Hospitality & Tourism
Amid concerns of global economic slowdown triggered by slump in oil prices, Dubai will continue to progress at a reasonable rate, attracting investors and job seekers from all across the globe. This is due to the fact that Dubai’s economy is set to expand by 4% in 2016, as lower oil prices will benefit the major sectors of Dubai economy (trade and tourism). Even though, the IMF revised its growth forecast for UAE from 4.6% to 3.1% in 2016, the ending of sanctions on Iran will inject US $13 billion in to the UAE economy between 2016-18, benefiting Dubai’s logistic, trade and tourism sectors considerably.
Dubai – The “City of Opportunity”
Furthermore, Dubai being an economically diversified and demographically cosmopolitan city, is considered as one of the best place to live and work as it was named as the Global ‘City of Opportunity’ by PwC as it was ranked (5th) in terms of global affordability, cost of living and purchasing power due whereas (1st) for airport connections to business districts. Similarly, the Economist Intelligence Unit ranked Dubai the (3rd) most improved cities to live over the past five years, as it has shown improvement in terms of offering better quality of life and advancement opportunities.
Not to forget, Dubai’s evolving education system and improving infrastructure has placed it (5th) in terms of both, the highest performing metropolitan economy as well as the fastest growing city in the world by Brookings Institution.
In terms of the Global Readiness Index (GRI) and the Change Readiness Index (CRI), UAE ranked (5th) which indicates that Dubai is well prepared to deal with financial crises, socio-economic changes or political shocks, placing it ahead of Singapore, Switzerland, Hong Kong, Norway, USA, UK and Japan. Likewise, in terms of Economic Openness in the world, UAE is ranked (3rd) whereas for Business Environment, Infrastructure and Technological Advancement, UAE is ranked (4th) in the world.
Impact of Oil Price Slump on Dubai Economy
Considering the IMF forecast and Dubai’s improved rankings, it can be stated that Emirate’s economy is ought to progress at a considerable pace, if not at brisk pace, in 2016. Taking into account that Dubai is labeled as one of the Most Diversified Economy (MDE) in the world, which mainly relies on sectors such as Services (Logistics, Real Estate, Hospitality, Social), Trade, Manufacturing and Construction etc., instead on Oil and Gas, economic progress should be expected in mid-to-long term. Mentioned below is the Sector Wise Contribution towards the GDP of Dubai in Q1, 2015.
Even though, the region is witnessing economic slowdown due to slump in oil prices, in past, Dubai has shown both adaptability and willingness to learn from the financial crisis of 2008 and fluctuations in the oil prices. Under the leadership of H.H. Sheikh Mohammed (the Ruler of Dubai and the Prime Minister of UAE), Dubai will continue to pivot and adapt to the global economic challenges to ensure progress.
Key Success Factors
- Increase in Tourist Numbers – Dubai is all set to become world’s third most popular tourist destination by 2017 replacing Paris which is currently ranked third behind Bangkok (2nd) and London (1st). Currently, Dubai is ranked fourth as in anticipate 14.5 Million visitors by the end of 2015.
- Economic Development in Dubai – One of the prime factors for Dubai’s emergence as an investment destination could be attributed to the continuous economic development that the Emirate has witnessed in the last decade. In 2014, Dubai’s GDP per Capita Growth Rate was 4.5% while it is currently growing at near around 4% and is forecasted to grow at same level in 2016.
- Dubai Connects East with West – Another factor contributing to the massive popularity of Dubai is its geographic location, which will continue to benefit Dubai as it seeks to capitalize from being the biggest re-exporting hub in the region, shipping Chinese goods to MENA, CIS, Europe and North America.
- EXPO 2020 – Dubai attracted AED 28.6 Billion ($7.79 Billion) worth of FDI in 2014 primarily in the infrastructure development initiatives and services industry. Regardless of global oil crisis, EXPO 2020 will lead to increased employment opportunities in Dubai with over 275,000 jobs created between now and 2021 that will impact the economy by approximately AED 71.9 Billion (USD 19.6 Billion). Most of these jobs will create demand for white-collar professionals.
The slump in oil prices and the lifting of the sanctions on Iran will be a blessing in disguise for Dubai allowing it to benefit from its geographical position apart from cross-linking it to emerging markets in Asia and Africa with developed one in the Europe. Additionally, with the growth in local and tourist population, coupled with the progress on EXPO 2020 event, Dubai will continue to provide massive investment opportunities in various sectors of the economy which includes Education, Retail, Hospitality and Logistics especially in Dubai Land and Dubai South which are the newest mixed-use real estate developments.
Research Konnection – This Research Report is compiled by Team Research Konnection; A Dubai Based Market Research Firm that specializes in Investment Research and Economic Feasibility Study. If you are looking for investment advice or more detailed business analysis, then feel free to konnect with us on email@example.com