Dubai trade sector performing better than predicted
The UAE economy is expected to grow at a relatively healthy rate of 3.8% in 2015, which is lower than the 2014 growth of 4.5%, according to Standard Chartered’ s Global Focus report.
As the hub for 55% of the region’s trade, Dubai benefits from ongoing trade flows and GCC countries are continuing to spend on their economies, reports Gulf News.
“We now estimate that Dubai’s trade sector will grow by a more robust 7% in 2015 (against our earlier projections of 4.5%) as improving regional trade dynamics support trade flows through Dubai ports,” said Shady Shaher, an economist with Standard Chartered.
Factors impacting the outlook for Dubai’s tourism and associated retail sectors include fewer Russian tourists vacationing in Dubai and a drop in their spending by 52% in the first quarter of 2015, according to Network International.
“We believe the growth rate for tourism and associated retail sectors will drop to 4.2% this year from almost 8.5% in 2014,” said Shaher.
Latest inflation data shows Dubai’s inflation rose to 4.2% in April, near its five-year high, while inflation in Abu Dhabi was at a 6-year high of 5.3%.
“Inflation is a key risk for 2015 growth. We view inflation numbers as a lagging indicator for cost of housing, which were slow to capture rising rents in 2015. We believe both rents and house prices to moderate this year,” Shaher added.