Dubai economic slump to persist: S&P

Updated September 04, 2019

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Growth in Dubai's economy has also been impacted by a deterioration in the key real estate and tourism sectors. — AFP/File
Growth in Dubai's economy has also been impacted by a deterioration in the key real estate and tourism sectors. — AFP/File

DUBAI: A slowdown in Dubai’s economy since 2014 is forecast to carry on through 2022 due to low oil prices, fallout from the US-China trade war and political turmoil, Standard and Poor’s said on Tuesday.

Growth in the Middle East’s most diversified economy has also been impacted by a deterioration in the key real estate and tourism sectors, the international ratings agency said in a report.

Dubai faces high public debt amounting to around $124 billion, or 108 per cent of gross domestic product (GDP), divided between the government and state-linked companies, the report said.

The emirate’s GDP grew at just 1.94 percent last year, its lowest since 2010 when the city state was still recovering from the impact of the global financial crisis and defaulting on its debt.

S&P said it expected Dubai’s economy to pick up to 2.4pc this year, largely due to the completion of projects related to the international trade exhibition Expo 2020 opening in October next year.

After the Expo, growth will then moderate to 2.0pc through 2022, it said.

The trade war between the United States and China, and lower regional demand due to sanctions on neighbouring Iran, are likely to slow transit trade, an important contributor to the Dubai economy, S&P said.

Dubai’s GDP grew at 4.8pc in 2013 before starting to decline and the drop accelerated last year after the property sector slumped and the number of tourists stagnated.

Published in Dawn, September 4th, 2019