Diversification -- not oil -- fuels Dubai

The downturn in oil prices and other financial pressures in the GCC have not slowed economic growth in Dubai, a crown jewel of the UAE that continues to draw on a vibrant tourism base and diversify the country away from independence on fossil fuels.

Ahmed bin Saeed Al Maktoum, chairman of the Economic Development Committee in Dubai, said the economy grew by 2.7 percent in 2016 and is expected to expand by 3.1 percent this year.

Citing sustainability and flexibility, Al Maktoum described how Dubai's leaders have prioritized diversification for the last three decades and how those efforts have fueled the economy.

"Real economic growth has averaged 5 percent a year, while the importance of non-oil economic activities has grown steadily,” Al Maktoum said in a keynote speech in January.

Al Maktoum also said the government will seek to strengthen the economy through trade outreach and the promotion of inter-community and international investments.

“We are working to ensure sustainable development while preserving the environment, and to achieve a perfect balance between economic and social development through improving the quality of air, preserving water resources, increasing the contribution of clean energy, and implementing green growth plans,” Al Maktoum said. He cited a "public-private partnership law" that is meant to utilize a model combining government expertise with private sector resources.

For more on the financial outlook in Dubai, the Gulf News Journal spoke with Rahul Koli, a research analyst at Aranca with close to four years of equity research experience across the GCC region.

“Unlike the rest of the GCC economies, Dubai is not a major oil producer and its economic performance thus remains relatively better than other major oil-producing countries in the region,” Koli said. He added that plans to grow Dubai’s non-oil-sector GDP from the current 70 percent to 80 percent over the next 15 years will help to counter any downward pressure from declining oil prices.

“This is likely to make Dubai’s economy even more resilient,” Koli said.

Koli also cited Dubai’s long-term goals codified in a “Vision 2021” plan. Among these, he said, are efforts toward ensuring sustainable economic growth, becoming the world’s leading business center, and making Dubai a business-friendly place to promote investment.

“Dubai is well on the path to achieve these goals through a series of measures,” Koli said. “Dubai has streamlined its regulatory policies, and is making infrastructure more tourist-friendly to achieve its goal of 20 million visitors by 2020. To further boost the Emirate’s aviation sector competitiveness, the government is focusing on localizing manufacturing capabilities wherever possible. In terms of export, Dubai plans to … increase the local presence of global manufacturers and support home-grown products into global markets … a recovery in private-sector investments would remain an important factor to watch in the Emirate’s bid to create a sustainable growth story.”