Hotel and restaurants activity grew 17 percent in 2012 to beat out manufacturing and retail as the most important industries contributing to Dubai’s economic rebound.
Dubai’s gross domestic product expanded the most in five years in 2012 as the emirate, whose economy collapsed after the global credit crisis, rebounded on hotel and restaurant activities.
The emirate’s economy grew 4.4 percent last year, compared with 3.6 percent in 2011 and 3.5 percent in 2010, according to Dubai Statistics Center data. The sub-index for restaurants and hotels grew 17 percent in 2012, while manufacturing expanded 13 percent. Wholesale, retail trade and repairing services, which account for 30 percent of Dubai’s GDP, climbed 2.3 percent, the data show. The emirate’s economy expanded 18 percent in 2007.
Dubai’s economy is rebounding as confidence in the emirate’s ability to repay its debt is restored. Three state- linked companies paid or refinanced $3.75 billion of debt in 2012, in addition to a 3.3 billion dirham ($898 million) liability that matured in April. Sheikh Ahmed bin Saeed Al Maktoum, head of the emirate’s Supreme Fiscal Committee, said the emirate is committed to repaying its debts, and will do “whatever we have to do.”
Dubai almost defaulted in 2009, when its economy shrank 2.7 percent, after it borrowed more than $100 billion to transform itself into a tourism and commercial hub. While the emirate still has $25.6 billion of debt outstanding, the cost of ensuring its debt has declined 125 basis points in 12 months to 250 basis points, according to data compiled by Bloomberg.
Dubai’s borrowing costs have also declined, with the yield on its 7.75 percent notes due October 2020 falling 170 basis points in 12 months to 4.6 percent today.
The emirate’s GDP may expand 4 percent this year as the construction and logistics industries revive, Masood Ahmed, the head of the International Monetary Fund’s Middle East and Central Asia department, said in May.
Editors: Glen Carey and Karl Maier.
To contact the reporters on this story: Alaa Shahine in Dubai at [email protected]; Dana El Baltaji in Dubai at [email protected]. To contact the editor responsible for this story: Andrew J. Barden at [email protected].
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Photo credit: Jumeirah Beach Park in Dubai, with Burj al Arab hotel in the background. James Forsyth / Flickr