Dubai GDP records 3.5% decline in first three months

Dubai’s GDP (gross domestic product) recorded a 3.5 per cent dip in the first three months of the year, just as the economy started showing the first signs of the COVID-19 pandemic.

Even then, the impact of the crisis on Dubai in the first quarter was “less compared to some of the world’s major economies”, the Dubai Statistics Centre states.

Arif Al Muhairi, Executive Director of DSC, stated, ” It was expected that in the first quarter of 2020 the economy will experience a decline due to the global impact of the COVID 19 pandemic.

“Being a central player in international trade and a vital global passenger transit hub, Dubai’s economy was affected by these exceptional circumstances.

“The worldwide restrictions on movement for individuals through air, sea, and land entry points, as well as the unprecedented intensification of precautionary measures, had significant repercussions on international trade and the global economy.”

In 2019, Dubai’s GDP was at Dh407.42 billion, up 2.2 per cent on 2018.

Trade dips, as does transport

Not surprisingly, trade and transport sectors felt the brunt of the first quarter 2020 slowdown, as did trade-facing warehousing and logistics.

Trading activity contracted 7.5 per cent in the first quarter – but retained its “status as the largest contributor to the economy, with 23 per cent of GDP.

Transport and logistics were down 5.5 per cent, but still contributed 12.1 per cent of GDP. “While the sector benefited from the significant decline in operating costs, such as aviation fuel cost, the decline was not enough to make up for the dip in revenues,” the statement added.

Last year, Dubai’s 2019 GDP growth was led by trading, which was up 2.7 per cent. It contributed 26.6 per cent of GDP

“The strategic and historical importance, the continuous focus it receives, and the supportive policies and services that enhance its performance enable trade to account for the largest share of the emirate’s economy,” Al Muhairi said.

Long shadow

The hotel and F&B categories also took the full impact of the virus attack and the measures put in place by the emirate to contain the spread. The category was down 14.8 per cent from the same period in 2019.

It had contributed 5.1 per cent to the economy last year. “The decline was expected given the movement restrictions in place during the height of the lockdown as well as the prohibition of foreign and domestic tourism, and the temporary closure of hospitality establishments,” the statement said.

A gain for the government

Interestingly, the public sector eked out a 0.6 per cent growth in the first three months over first quarter 2019. It now makes up 5.1 per cent of the broader economy.

“The role played by the public sector was significant in mitigating the impact of the global economic crisis experienced in Q1-2020,” the government said in the statement.

But some pain too

The healthcare sector, which was at the very centre of affairs, actually declined 3.7 per cent between January to end March, “due to the need to allocate the majority of health resources to combating the pandemic.

And the education sector, despite the restrictions from March, recorded a growth of 1.1 per cent “as a result of the continuation of the process through online learning”.