São Paulo – Dubai may exit the crisis before expected. Hit by a real-estate bubble and the 2008 financial crisis, the emirate is already showing signs of economic recovery, according to statements made by government officials following a World Economic Forum meeting held last week in Dubai. The local government expects the Gross Domestic Product (GDP) to reach US$ 133 billion in 2015. By 2015, the government expects the emirate to grow by 4.5% to 5% a year. During the same period, the United Arab Emirates will not grow by more than 4%.
According to newspaper Financial Times, the director of Dubai’s Department of Economic Development, Sami al-Qamzi, said the emirate’s economy is much more diversified now, and more resistant to external and domestic shocks. “We believe the growth will be much more sustainable, though more moderately paced than in previous years,” said al-Qamzi according to the newspaper.
The crisis in Dubai was caused both by domestic problems, such as a real estate price hike, and external ones, brought about by the 2008 economic crisis. The economy went into recession in 2009. On that occasion, the neighbouring emirate and national capital Abu Dhabi loaned US$ 20 billion to rescue Dubai. The debt has since been refinanced, but some of it is due between 2014 and 2016. Besides, Dubai has sold some of its assets since 2009.
According to al-Qamzi, Dubai’s economic recovery is being driven by growth in the transportation and tourism industries. In the first half of this year, the emirate received 10% more tourists than in the same period of last year. Real estate, a culprit of the crisis that hit Dubai, has begun to recover.
Even though he says “the cranes are moving again” and that that is a good sign, al-Qamzi acknowledges that real estate speculation is also back. It is nothing like in the early 2000s though, when buildings were bought and sold more than five times before they were even built.
*Translated by Gabriel Pomerancblum
