SHARJAH, 4 January 2005 — The emirate of Dubai posted a nearly 17 percent growth in gross domestic product, registering the highest economic growth in the world, in the year 2004. The growth was attributed to the government’s support for the private sector, increase in local spending, constant growth of non-oil sectors and sustained high oil prices.
Mohammad Ali Al Abbar, director-general of the Dubai Department of Economic Development, announced that Dubai’s GDP rose 16.7 percent to almost 100 billion dirhams in 2004 and said that the strong growth would continue through 2005, with GDP expected to rise 10 percent to 110 billion dirhams.
Describing 2004 as “a golden year” for Dubai, Alabbar said that Dubai’s GDP recorded a phenomenal increase to 98.1 billion dirhams at current prices, in 2004, up from 84.1 billion dirhams in 2003.
“When compared with 62.3 billion dirhams in 2000 and 41.2 billion dirhams for 1995, the accumulated annual growth of Dubai’s economy in the last decade at 10 percent, the highest growth rate in the world,” he said.
He ascribed the phenomenal growth in 2004 to several factors, including the initiatives launched by Crown Prince of Dubai and UAE Defense Minister General Sheikh Mohammed ibn Rashid Al-Maktoum, “The government’s unlimited support for the private sector coupled with a dramatic increase in local spending, the constant growth of non-oil sectors and the sustained high oil prices” have all been contributory factors,” said Alabbar.
He said Dubai’s performance in 2004 also reflected the success of the emirate’s economic diversification policy. “Although the oil contribution to the GDP grew 10.9 percent in 2004, the corresponding growth of 17 percent in the contribution of non-oil sectors enabled Dubai’s GDP to reduce its dependence on oil to 6 percent in 2004, down from 7 percent in 2003,” he said. The contribution of non-oil sectors increased from 78.22 billion dirhams in 2003, representing 93.4 percent, to 91.5 billion dirhams representing 94.3 percent in 2004 - a significant increase when compared to 55.9 billion dirhams in 2000 and 34 billion dirhams in 1995.
Alabbar noted the growth in 2004 was clearly reflected in the continuous inflow of foreign capital a trend that is expected to be maintained with the prevailing lucrative return on investment in key sectors.
In addition, government initiatives and large companies in the emirate have helped local and international interest rates to stabilize at low levels, encouraging private investments and offering opportunities for a wide spectrum of segments.
“Economic indicators showed a quantum leap in the construction sector for the third year in line, making it one of the key elements of growth, besides trade, tourism and aviation,” said Alabbar. “The growth in cross-sector relations has further energized these sectors, with the increase in tourist numbers having a positive impact on trade, services and tourism, and the exceptional growth of the construction sector creating a similar positive impact on trade, services and banking,” he said.
Alabbar said he expected the growth to continue throughout 2005, supported by the high level of confidence in the local economy by investors from inside and outside the region. He also said the government’s commitment to develop and enhance business with major public and private sector partnerships would provide new opportunities for growth and investment.
According to the Dubai Department of Economic Development, the construction sector achieved the highest growth rate in 2004, registering a 29 percent rise and raising its shares of the GDP to 11.1 billion dirhams from 8.6 billion dirhams in 2003, compared with five billion dirhams in 2000 and 3.4 billion dirhams in 1995.
The real estate sector posted the second highest growth rate, up 22 percent to 10.3 billion dirhams from 8.4 billion dirhams in 2003. It was 6 billion dirhams in 2000 and 4.3 billion dirhams in 1995.
The industrial sector grew by 16.6 percent and contributed 15 billion dirhams to GDP last year, compared with 12.9 billion dirhams in 2003, 10 billion dirhams in 2000 and 4.6 billion dirhams in 1995.
The telecommunications, transport, travel and freight sectors grew 19.3 percent to 16.24 billion dirhams from 13.6 billion dirhams.
Trade rose 14.7 percent to 14.8 billion dirhams from 12.9 billion dirhams.
The financial sector has a GDP share of 9.8 billion dirhams in 2004 reflecting a 13 percent growth when compared with the 2003 figure of 8.6 billion dirhams. The tourism hospitality and catering sector grew 16.4 percent to 4.4 billion dirhams from 3.7 billion dirhams. The government services sector’s contribution grew four percent to 7.5 billion dirhams.