Dubai may grow 4% this year

DUBAI — The economy of Dubai is expected to grow four per cent this year and over six per cent next year on rising trade, infrastructure spending and robust economic activity in Asia, economists said on Wednesday.

By Abdul Basit (with input from agencies)

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Published: Thu 31 Mar 2011, 11:26 PM

Last updated: Mon 6 Apr 2015, 5:29 PM

Dubai’s government also expects its economy to grow by up to four per cent this year, helped by a recovery of trade and logistics sectors, although slow lending and debt repayments will remain a challenge.

Recovery of its trading partners, mainly India, is seen helping boost 2011 growth of the emirate, which accounts for almost a third of the UAE’s gross domestic product.

“Given the vibrant recovery of the trade and logistics sectors, growth will accelerate in 2011,” Mohammad Lahouel, chief economist at Dubai’s Department of Economic Development, told a conference on the emirate’s economic outlook.

“A conservative estimate would put growth in 2011 between three and four per cent, but closer to 4 per cent,” Lahouel added.

Farouk Soussa, Citigroup Inc’s chief Middle East economist, said, “Dubai GDP may grow 3.5 per cent to 4 per cent this year and six per cent in 2012, spurred by infrastructure spending and foreign investment.”

The emirate is “blessed by prime location” and there’s “real appetite” for investing there, he said at a conference in Dubai. Infrastructure development, foreign investment and geographical location are driving growth, Soussa said.

Real gross domestic product grew 2.2 per cent in 2010, the statistics bureau said this month. Growth is likely to accelerate to 4 per cent this year, Standard Chartered Plc said in December.

While Dubai will see its recovery gain “traction” this year, it needs more counter-cyclical fiscal policies, according to Marios Maratheftis, a Standard Chartered economist based there.

Dubai is geographically well-located to reap benefits from rapid economic growth in Asia, Maratheftis said, adding: “Dubai should consider some kinds of taxation. It needs more sources of revenues.”

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