Government-led policy initiatives and investments, improved growth prospects in trading partners, and preparation to host Expo 2020 Dubai are expected to drive the Emirate’s real GDP growth rate to reach 2.1 per cent in 2019.

Real GDP growth rates in the short to medium term are projected to reach 3.8 per cent and 2.8 per cent in 2020 and 2021, respectively, reported state news agency Wam, citing a report released by the Department of Economic Development (DED) about the Dubai Economy.

The report said that economic momentum picked up at the beginning of this year, with a surge in new business licenses and improved optimism on jobs and business performance. During the first three months of the year, 6,709 new business licenses have been issued, a 29 per cent increase over the same period in 2018.

Similarly, the first quarter Composite Business Confidence Index (BCI) climbed 10.2 points from the previous year and 7.7 points from the previous quarter, indicating a marked improvement in business prospects and overall sentiment.

The majority of businesses indicated their intention to place new orders and, subsequently, expect volume, revenues, as well as profits to increase. The quarterly BCI survey conducted by DED also indicated that 59 per cent of companies are optimistic about growth in Q1 2019, compared to 41 per cent for the same period of 2018, and 34 per cent expect stability, while 7 per cent of businesses expect a decline in growth, down from 8 per cent a year ago.

During the first quarter of this year, the Dubai Financial Market General Index gained 4 per cent. Net foreign investment in the market during the first three months of the year reached Dh680 million and accounted for 65 per cent of the total trade in DFM. Institutional investors accounted for Dh492 million of first quarter investment, underlining their growing confidence in Dubai’s economy.

Major policy initiatives were introduced and contributed to reducing the cost of doing business, boosting SME liquidity, and supporting the tourism and the real estate sectors. Inflows of foreign direct investment, FDI, into Dubai also accelerated and reached Dh38.5 billion in 2018, an increase of 41 per cent over its 2017 level. These and other initiatives contributed to accelerating growth during the second half of 2018 to 2.2 per cent, resulting in an overall real GDP growth rate in 2018 of 1.9 per cent.

These achievements were realized, despite the considerable headwinds that the world economy was facing in 2018. Rising trade tensions, declining growth in countries like China with commensurate relatively low oil prices, and regional and global geopolitical risks, including uncertainty about Brexit, had adverse effects on confidence and investment plans, and reduced global growth and its prospects. Increased regional tensions further moderated global growth and prompted stock market sell-offs amid increased risk aversion among investors.

Unsurprisingly, most international economic organisations, including the World Bank and the International Monetary Fund, IMF, continued revising downward their global growth outlooks for 2018 and beyond.

Dubai government is currently engaged in developing new growth drivers to be fully prepared for future changes in the global and regional economic landscapes, including where matters concern artificial intelligence, the Internet of Things, and the Fourth Industrial Revolution. Initiatives are underway to attract private sector investments in new innovative sectors and expand to regional and global markets. As such, the projected growth rates reported above represent a low case scenario for future growth.

Expo 2020 Dubai represents a strategic investment in the on-going transition of the Emirate into a knowledge-based economy, underpinned by creativity, innovation and global collaboration. According to a detailed study, the contribution of Expo 2020 Dubai to gross value-added over the period 2013-2030 has been estimated at Dh122 billion. During the period 2013 – April 2021, construction and delivery of the Expo site are expected to contribute Dh38 billion, with direct benefits to the construction, business and financial services, transport, storage, and communication sectors.

The event itself is expected to add another Dh23 billion to gross value-added through on-site and off-site expenditures, with direct benefits to the tourism, communication, business and financial services, transport, real estate, and retail sectors. The quantifiable elements of the legacy that Expo 2020 Dubai will create between May 2021 and 2030 has been estimated at Dh62 billion. An important aspect of Expo 2020 Dubai is the direct boost it will give to those small and medium enterprises operating in Dubai, which are expected to receive close to Dh5.2 billion in new business up to April 2021 when the event ends.

Significant other investments are taking place alongside those targeted at Expo 2020 Dubai. They are being driven by a new Dubai Government strategy that seeks to seize on the remarkable growth of sustainable or impact investment –a targeted investment that aims to solve environmental and social problems. Investors have been driving global demand for impact investments worldwide, a market that reached $30.7 trillion at the start of 2018, which was a 34 per cent increase in two years, according to the Global Sustainable Investment Alliance.

Dubai has started tapping into the volume of impact investment projects. At the margins of this year’s World Economic Forum annual meeting, the Hamdan Centre for the Future of Investment, HCFI, announced a new program to build the capacity, skills and partnerships needed to seize on the opportunities Impact FDI trends are creating. The program will also benefit from five targeted investment promotion missions this year to the United States, China, Japan, South Korea and India.

These and other efforts, including the newly enacted 100 per cent foreign ownership law, are expected to lead to an increase in total FDI flows into the UAE by 15 to 20 per cent annually, and reach Dh50 billion in 2020.

The Dubai Government is scaling up its support to local businesses by multiplying buyer-seller meets in and outside Dubai, and working closely with the Federal Government to ease trade barriers in countries with high growth potential, and also focusing on sectors that are growing at above the rate of global trade growth. Dubai Government is also focusing its efforts on harnessing the power of female entrepreneurs through the SheTrades MENA initiative, which seeks to connect three million women entrepreneurs to markets by 2020.

The Government has also launched the ‘Exporters Gateway,’ a knowledge platform that provides vital economic and trade data for the UAE and Dubai, as well as information on the most sought-after UAE products. The platform provides exporters with detailed information at the country, sector and product level. It helps exporters find new export markets for their products and services, identify partners, and estimate export costs.