New index Measures Dubai’s Economy

According to the new index, Emirates NBD Dubai Economy Tracker, implemented to measure Dubai’s the economic growth rate of its non-oil sector; the emirate marked a slight decrease during April.

The new index was officially introduced by the emirate’s banks a few days ago, and it said to cover more than 600 companies within Dubai’s private sector. The purpose of the index is to measure the performance of Dubai’s private non-oil based sector on a monthly basis.

Dubai’s new index is founded on the Purchase Manager Index, which has been adopted by a variety of other countries. According to Markit, the assembler of the index, all of Dubai’s private companies, regardless of size, will be monitored in order to measure the emirate’s economic growth. The aim to create a precise and accurate picture of the performance of Dubai’s non-oil based economy.

Besides measuring Dubai’s economic performance, the DubaiBusiness Activity Index also records the emirate’s employment rate. According to the index, Dubai’s employment rate dropped slightly from March to April from 60.6 to 57.2 respectively. However, even though the employment rate dropped, it is still above 50.0 indicating the emirate’s economy is expanding rather than contracting.

The index has revealed that although the slight slump Dubai has experienced, its private sector growth rate is resilient and strong when compared to other international economies. It must also be taken into account that the emirate’s economy remains strong regardless of the drop in oil prices that has influenced other oil-based economies.

The Real Estate Tracker results also reveal that Dubai’s property market will experience a slight strengthening. The tracker, which measures the rate of growth of the emirate’s property market, is conducted every two months. The tracker surveys around 600 domestic properties and 70 real estate agents. According to the property tracker, property values will show a small increase in value as well as demand. 

Dubai Economic Growth and Services Sector

Dubai’s services sector is vital to its economic growth as the city is improving and updating its systems by using digital technology. According to Oxford Business Group (OBG) report, Dubai’s intention to increase its tourism is clear, as 2020 Expo is in the horizon, offering countless investment opportunities for investors interested in the hospitality sector and other intertwined infrastructure and sectors. 

While the city’s efforts to recover from the devastating 2009 financial crash are paying off, Dubai’s role as a regional hub is further attracting investors thus increasing capital flow.

Factors that will contribute to Dubai’s Future:

1. Dubai has upgraded

The MSCI upgraded the UAE from frontier to emerging market in 2014, which has led to increased liquidity. At the same time, it is anticipated that an improved trading platform will lead to a greater interest amongst companies that are considering registering. Financial experts believe that the upgrade will aid the UAE attract companies outside the UAE borders. Finally, in 2014, Dubai also raised an equity capital, marking the city’s first offering over a period of five years.

2. Public Offerings

Dubai has planned numerous projects for the upcoming 2020 EXPO including the launching of an Initial Public Offering (IPO ) pipeline. Reevaluated rules and regulations involving listing and resilient prices of the stock market will also contribute as to when precisely the IPO pipeline will be launched. On a bright note, the fact that Dubai’s government has set as priority to strengthen the city in order to become a stronger regional financial centre as well as vigorously progressing with infrastructure plans are both promising factors that will attract investors in purchasing sukuks (Islamic bonds) and equities.

3. Real Estate

Dubai’s construction sector has increased overall contributing 8% to the city’s GDP in 2013, which is a rate well below the 14% increase marked in 2008, which led to the financial crash. Construction loans marked an increase of 40% at the end of 2013, reflecting construction companies’ restored confidence in the real estate market. Statistics revealed that the 40% loan increase was the highest increase since mid-2009.

4. Public-Private Partnership Collaboration

Dubai’s construction market is anticipated to benefit immediately by the emirate’s plans to implement a public-private partnership (PPP) model, which is further encouraged by the government’s vision and plan for getting all its projects on the internet. By presenting PPPs, Dubai intends to attract funding for new and huge business ventures, particularly for residential as well as public ventures. The legislation framework is presently being revised and drafted. If the PPP model is accepted and introduced, it will be the second model in force throughout the Gulf region.

5. Green Economy

Dubai has marked energy saving as its top priority. Dubai Integrated Energy Strategy (DIES) strives to decrease its energy consumption by 30% until 2030, as it intends to make smart use of water and electricity. Additionally, the newly founded Dubai Energy Agency (DEA) aims to increase efficient use of energy by advising consumers, industries as well as the government.

Dubai- India ties

A delegation from Dubai visited India, Mumbai with the intention of discussing new investment opportunities in order to enhance the two countries economic relationship. Dubai’s main intention is to strengthen Dubai-India trading ties.

The Dubai International Financial Centre‘s (DIFC) delegation, made a number of presentations and discussed the idea of implementing and developing Dubai’s position as a competitive business jurisdiction. The delegation noted that the two parties, India and the UAE, have developed a strong foundation thanks to their long and fruitful collaboration and that it is time to make their relations stronger by investing in areas both countries have interest.

The DIFC is not only interested in attracting skilled employers and industry expertise, but also to invest in investments that will eventually generate and establish effective commercial, investment and economic allies.

The DIFC delegation was attended by nearly 50 potential as well as existing clients who were interested in the DIFC’s effective regulatory structure, infrastructure as well as legislation framework.

The DIFC has benefited by the visit to Mumbai as many potential clients have shown their interest including investment banks, banks, insurance and reinsurance brokers and providers. Additionally top India-based firms also expressed their interest in setting up in the UAE to expand in the Middle East and Africa.