Dubai economy to grow at a faster pace in 2022 amid Expo boost and digital economy push

Government measures to support businesses and efforts to boost start-up ecosystem have also helped economic transformation, chief executive of Dubai Chamber says

Hamad Buamim, president and chief executive Dubai Chamber, said it was necessary 'to realise that Dubai depends a lot on tourism'. Satish Kumar / The National

Expo 2020 Dubai has proven to be a catalyst for growth of the emirate's economy, which is set to expand at a faster pace next year, as Dubai continues to take steps to develop its digital economy and boost the start-up ecosystem, the head of Dubai Chamber of Commerce and Industry said.

The emirate's economy is recovering strongly from the pandemic and even sectors that were most affected due to the global slowdown are bouncing back, Hamad Buamim, president and chief executive of Dubai Chamber, told The National on the sidelines of the 12th World Chambers Congress in Dubai on Tuesday.

Government measures to support businesses and the digital transformation during the pandemic have also played vital roles in the economic rebound, he said.

“We have diversified our economy,” Mr Buamim said. “[In] the last quarter or so, even those [sectors] that weakened [during the pandemic], they have started to recover quite well.”

The emirate’s economy is forecast to expand 4 per cent in 2021, according to government projections released in December. The economic recovery has picked up pace, especially in the months preceding Expo 2020 Dubai, which began last month. The emirate's non-oil economy maintained growth in October, with business conditions posting the sharpest improvement in two years, as Expo 2020 Dubai boosted business confidence, according to IHS Markit, which compiles Dubai Purchasing Managers' Index.

The property sector is also rebounding strongly in terms of sales and recent reports on the retail sector suggest it is growing rapidly. The emirate will achieve its economic expansion forecast for this year but next year will be much better, Mr Buamim said.

“We think the recovery we are seeing in the fourth quarter will fuel the [economic activity] in 2022,” he said. “Hopefully, it will bring the recovery way beyond the single-digit level that we have seen projected for the UAE and Dubai.”

Dubai's economic expansion trajectory is also reflected in Dubai Chamber’s membership growth. It added about 16,000 new businesses to its list of members in the first nine months of this year, a 5.8 per cent growth that pushed the total membership to 275,000.

“This is our fastest year of [membership] growth in the past five years,” he said.

Dubai, the commercial and tourism hub of the Middle East, has bounced back strongly from the pandemic-driven slowdown on the back of government measures to curb Covid-19 and improve the emirate's business environment despite pandemic headwinds.

It has introduced stimulus packages worth Dh7.1 billion ($1.93bn) to support its economy and minimise the effects of the pandemic on businesses and people.

Dubai, which merged its economy and tourism departments this month in an effort to boost the emirate's competitiveness, issued 55,194 new licences in the first 10 months of this year, a 69 per cent annual increase, Department of Economy and Tourism data showed.

E-commerce licences – which allow business activities online and across social networking accounts – also posted solid growth in the first half of the year, up 63 per cent at 3,243 from 1,989 a year ago.

Mr Buamim expects business confidence in Dubai’s growth potential to remain high as the economic transformation driven by the Expo will last beyond the six months of the world's fair.

“People are hungry to reactivate [business] activity and Dubai is giving them the opportunity,” he said. “We believe 2022 will be … much bigger than the years we had before and this will continue to sustain business confidence.”

Although the make-up of the economy continues to evolve from pre-pandemic times and various sectors are recovering and contributing to the overall economic output differently, areas such as tourism will remain central to future growth of the emirate, Mr Buamim said.

“Of course, we have to realise that Dubai depends a lot on tourism,” he said. “The reality will catch up with history” when airports will start buzzing at pre-pandemic levels and “tourists from all those different countries will be able to find their way back in Dubai”, he said, commenting on when the emirate's economy will rebound to 2019 levels.

Trade and the digital economy, however, have already recovered and are at a better stage than they were in 2019, he said.

Dubai Chamber is keen to further develop the digital economy. It is working with Google to support small businesses to establish an online presence.

“Presence online is an enabler, it is the starting point,” he said, adding that so far, the Dubai Chamber has helped more than 50,000 UAE businesses to go online.

It also helps these businesses through partnerships with tech giants such as Amazon and Facebook to “connect these big players with the community of our small businesses”, Mr Buamim said.

Dubai Chamber, which is a representative body of businesses in the emirate, is also pushing to further develop Dubai’s start-up ecosystem. In January, it plans to bring venture capital investors and start-ups together through a series of events to enable access to funding for companies looking for growth financing.

“We know the pain points … this is a big ecosystem and start-ups are just one part of it,” he said.