Dubai’s economy is all set to show a strong performance in 2019 because of the government’s actions and on-time corrective measures like visa reforms, options for permanent residency, stimulus packages and various fee waivers to counterbalance the effect of a slowdown in global financial markets.
Latest reports issued by Dubai’s DED or Department of Economic Development indicated that the investor confidence is growing in the emirate as the department has issued about 35 percent additional business licences in the initial four months of 2019. This shows that there has been a spurt in DMCC company formation and JAFZA company formation.
The recent DED data showed that manufacturing and tourism sectors are likely to drive the growth in Emirates at 2.1 percent in 2019 and 3.8 percent next year. It credited the increase in GDP growth to an array of initiatives employed under the stimulus package of the Dubai government since quarter 2 of 2018.
It is also expected that Expo 2020 would add substantial value to the economy due to direct advantages to tourism, transportation, business, telecommunications, financial services, real estate and retail sectors. The government initiatives have helped in reducing the cost of doing business in various sectors like aviation, education and real estate, which in turn boost investments and growth.
The Business Confidence Index in Dubai also surged to 117.8 points right in the quarter 1 of 2019 as compared to 116.4 points in the same period of last year, as per a DED survey.
The firms participating in the survey said that they expected higher profits and selling prices in quarter 2 of 2019, mainly because of seasonal demand. The manufacturing sector has been the most hopeful on business volumes, incomes and employment. Overall, bigger businesses have larger expectations for quarter 2 of 2019 as compared to small and mid-level enterprises.
It is obvious that the Dubai economy is gradually moving from traditional sectors such as transshipments or real estate to long-term sectors such as manufacturing and services. This is set to make company formation in Dubai easier and more profitable and it will also make Dubai’s economy even more vibrant and appealing.
FDI inflows swell up
Data from the Dubai Investment and Development Agency’s Dubai FDI Monitor proved that a total FDI inflow of Dh22.2 billion has come into Dubai by the end of the quarter 1 of 2019 as compared to Dh7.3 billion in the same period of last year. A framework for a FDI Committee is under development and the DED is also participating in this exercise and is creating a guide for executing the new investment law, which is set to enhance foreign ownership to 100 percent in some sectors and fields to further attract inward FDI.
Tourism and hospitality sectors to grow even further
Tourism is another major sector in Dubai that has continued to expand with a 2.2 percent increase noted in arrivals in the first quarter of this year as compared to same quarter in 2018. The average occupancy rate of hotel rooms in Dubai has gone up to 79 percent in the period of January to March 2019 or quarter 1 as compared to 77 percent in the quarter 1 of last year.
The data published by the Dubai Statistics Centre shows that the general inflation rate in Dubai went down in the first quarter of this year to 3.72 percent as compared to a 2.27 percent hike in the same period of last year.
Jitendra Gianchandani, who is the chairman and managing partner of the Jitendra Consulting Group, said that Expo 2020 and new long-term visa initiatives are going to boost the confidence in the Dubai economy. “Dubai’s economy remained sluggish in 2018 due to lacklustre international business sentiments, post-VAT impact, stringent banking effecting local and free zone companies in most of the sectors. However, it is a good omen that the economy picks up speed in 2019,” he said.
“The government also needs to further strengthen the SME sector by opening up funding possibilities for such, as it will enhance both employment and economy further. The central bank can stipulate a minimum funding criteria for SMEs, which all banks need to follow,” he added.
