Economy
No one could ever accuse Dubai of thinking small. The Economic Development Plan within ‘Vision 2015’ calls for Dubai to achieve GDP of USD 108 billion by 2015, to sustain real GDP growth of 11 percent per annum, to increase real per capita GDP from the current USD 31,000 to USD 44,000 by 2015, to boost productivity by 4 percent per annum, and to continue to expand its best-performing sectors while also creating new growth sectors that will bring Dubai competitive advantages.
Focus on sustainable growth
In other words, ‘Vision 2015’ aims to keep the Dubai economic miracle going strong and since Dubai has a history of not only meeting its targets, but meeting them ahead of time – it reached its 2000-2010 goals in only five years – the emirate is expected to achieve its ‘Vision 2015’ goals even before 2015. In fact, Dubai’s economy has been growing faster than those of China and India for the past six years, and the new strategic plan is geared to sustaining this outstanding track record.
Liberal government policies, outstanding infrastructure, economic stability, excellent quality of life, and a wide range of investor-friendly free zones have combined to keep foreign and local investment flowing in to Dubai.
The small city state running out of oil has become an international financial-services hub; a trendy upscale tourism destination; a high-potential property investment market; an ideal business base offering exceptional tax advantages, incentives and growth prospects; and the biggest re-exporting center in the Middle East. Now with more than 100,000 companies and with rapidly expanding global trade, particularly with China and India, Dubai has established the foundations for future strong economic growth.
Non-oil activities continue to flourish
It has also developed an economy in which oil now plays a very small part. Between 2000 and 2005 alone, Dubai’s non-oil sectors grew by 15.1 percent per year (compared to overall average annual GDP growth of 13.4 percent), and non-oil sectors accounted for 95 percent of Dubai’s GDP in 2005 compared to only 46 percent in 1975. In 2007, according to the Dubai Chamber of Commerce and Industry, Dubai’s non-oil foreign trade surged an astonishing 33 percent to reach a record USD 185 billion, and the emirate’s non-oil foreign trade is expected to continue to grow this year and beyond.
Dubai a model for the Gulf region
In 2006, Dubai’s GDP grew by 20 percent and reached a record USD 168.5 billion, and in 2007 it rose again, to USD 186.2 billion. This year, according to Merrill-Lynch analysts, the combined GDP of the United Arab Emirates, under pressure from inflation, will slow down but should still reach 19.1 percent in nominal terms, with non-oil sectors gaining an even larger share. Dubai continues to be the envy of the Gulf in its ability to expand its non-oil sectors and thus create a buffer against the pressures of inflation and oil-price fluctuations.
Now ‘Dubai Inc.’ is taking its success story abroad. Unlike most of its neighbors in the Gulf, who tend to invest in sovereign wealth funds and shares in Fortune 500 companies, Dubai’s foreign investments are in expertise as well as cash. Dubai developers are building a USD 27 billion city in Saudi Arabia, luxury projects in Algeria, resorts in Morocco, and ports in Indonesia, to name just a few examples. Developer Dubai World is investing USD 800 million in Djibouti alone.
These initiatives are further buttressing Dubai’s economy, a key goal of Sheikh Mohammed’s ‘Vision 2015’. The plan focuses on promoting growth that is not only strong, but also sustainable. “This approach will strengthen Dubai’s healthy sector mix by ensuring focus on key sectors while further promoting diversification and ensuring reduced vulnerability to external shocks, and a systematic integration into the regional and global economy,” the new plan states.
Key sectors targeted
Dubai is particularly targeting tourism, financial services, professional services, trade and storage, transport and logistics, and construction, all of which are “highly conducive to future global growth … and are well placed to constitute the focal point of Dubai’s future growth,” according to the plan. A guiding principle of ‘Vision 2015’ is that since several of Dubai’s strongest sectors are also those forecast to experience the most significant growth globally, it makes sense to target them.
Sheikh Mohammed’s plan also calls for a focus on human capital, productivity, innovation, attractive costs of living and doing business, quality of life, economic policies and institutional framework, and laws and regulations, as well as coordination with the federal government’s plans for the United Arab Emirates as a whole.
Dubai has already achieved enviable performance in all these fields, and now it aims – characteristically – to surpass itself. Dubai’s groundbreaking achievement as the first country in the region to successfully diversify on a grand scale is set to continue to bear fruit in the future.
