Dubai’s economy expands to hit $30bn in first quarter

Dubai Tourism

• Real GDP rose 2.8% in Q1
• PMI dropped but remained well above 50
• Tourism had strongest growth

Dubai’s real GDP rose 2.8 percent year on year in the first quarter of 2023, to reach AED111.3 billion ($30.3 billion), while inflationary pressures and costs eased for Dubai’s non-oil business sector in July.

The latest purchasing managers’ index (PMI) data from S&P Global revealed another strong month of growth for the non-energy private sector, driven by expansions in output and new business.

“The latest data showed that firms were more confident about the future, supply conditions continued to improve, and price pressures were stable,” David Owen, senior economist at S&P Global Market Intelligence, said.

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The Dubai PMI dropped to 55.7 in July from a ten-month high of 56.9 in June, but indicated a strong upturn in operating conditions across the non-oil economy. 

Any reading above 50.0 signals an expansion on the month, while readings below 50.0 show a contraction.

“Growth in new order intakes, successful marketing and project wins drove a considerable upturn in output, with nearly a third of businesses seeing a monthly expansion,” said Owen.

However, the pace of growth slowed from the end of the second quarter, attributed largely to the dampening of sales as a result of competitive conditions.

The slowdown was witnessed most keenly in wholesale and retail, which reported the softest rise in sales since March.

Travel and tourism remained the strongest-performing sector in terms of demand growth.

The data showed that the rate of employment growth in Dubai in July eased to a three-month low, particularly in the travel and tourism and construction sectors.

Dubai’s rise in real GDP was backed by transportation and storage sector growth. This area outperformed other sectors with 10.3 percent growth, contributing 48 percent to the GDP.

Accommodation and food services followed with growth of 5.6 percent, Dubai Media Office said in a statement.

The trade sector recorded 1.2 percent year-on-year growth in the first quarter, bringing an added value of AED25.5 billion.

This accounted for 22.9 percent of the economy and contributed 10 percent of the overall increase in the first three months. 

Financial and insurance activities grew 3.2 percent, contributing 12.7 percent to the GDP and AED14.2 billion in added value. The sector accounted for 15 percent of Dubai’s overall growth during the period.

Real estate activities increased by 2.4 percent, adding 7.4 percent to the economy and 6 percent to the overall recorded growth. This was driven by real estate margins on property sales, which increased significantly in the first quarter of 2023.

The emirate launched a 10-year economic plan called D33 in January. It is seeking to double the size of the economy and make Dubai one of the top four global financial centres in the coming decade.