Dubai GDP Grows Picks Up in First Half on Hotel OccupancyAlaa Shahine
Dubai’s economy is headed for the fastest expansion in six years as the Middle East’s financial and transport hub benefits from an increase in hotel occupancy and manufacturing.
Gross domestic product expanded 4.9 percent in the first half of 2013, the statistics office said today. The economy of the second-biggest sheikhdom in the United Arab Emirates expanded 4.4 percent in 2012, the most since 2007.
The hotels and restaurants industry grew 14 percent in the first half, while manufacturing expanded 13 percent, as the emirate extends its recovery after almost defaulting on debt in 2009. Lacking the oil wealth of neighboring Abu Dhabi, Dubai has relied on trade, tourism and financial services for growth. It owns Emirates Airlines, the world’s biggest carrier by international traffic, and its tax-free financial center is home to regional offices of banks including Goldman Sachs Inc.
“Dubai is seeing an acceleration in a number of sectors, benefiting from increased investment and exports, including tourism,” Monica Malik, Dubai-based chief economist at investment bank EFG-Hermes Holding SAE, said in e-mailed comments. “We continue to see a strong outlook for the second half of 2013.”
Hotel occupants rose 11 percent in the first half to 5.6 million people, the statistics office said. The number of hotel rooms increased by 4,729 to almost 59,000.
Growth rates in hospitality and manufacturing “are all the more impressive as they are calculated off a high annual base,” Khatija Haque, senior economist at Emirates NBD PJSC, Dubai’s biggest bank, wrote in a report. “We were expecting growth in both these sectors to moderate somewhat in 2013.”
Business services and real estate, at the heart of Dubai’s debt crisis, grew 3.3 percent. Electricity, gas and water expanded 4.3 percent.
Companies such as Emaar Properties, builder of the world’s tallest skyscraper in Dubai, are benefiting from the recovery. The developer, which also owns hotels and shopping malls, reported a 50 percent jump in third-quarter profit to 581 million dirhams.
Emaar shares rose 0.8 percent to 6.10 dirhams today. The benchmark DFM General Index has surged 79 percent this year, making it the best performer among the 50 biggest equity markets globally.
Dubai’s economic data in the first half “suggests that risks to our full year 4 percent growth forecast are very much on the upside,” Haque wrote.
Emirates NBD raised its estimate for U.A.E. growth to 4.4 percent from 3.8 percent in October, joining HSBC Holdings Plc, National Bank of Abu Dhabi PJSC and the International Monetary Fund in noting the country’s revival.
With oil production remaining “at relatively high levels through October,” that estimate may also be “too conservative,” Haque wrote.