Bond sales to boost Dubai growth

Dubai’s economic growth is projected to pick up by more than 2 per cent in 2011 as the emirate is pulling out of the debt problems at some of its entities following a landmark restructuring deal, according to the International Monetary Fund (IMF).

Dubai’s recovery will be part of the overall real GDP growth of between 3 and 3.5 per cent in the UAE in 2011, up from 2.4 per cent in 2010, Masoud Ahmed, Director of the IMF’s Middle East and Central Asia Department, said.

“According to our estimates, Dubai is expected to achieve real GDP growth of around 0.5 per cent this year [2010] and more than 2 per cent in 2011,” he said in an interview with the Arabic language daily Albayan.

“The successful decision to restructure Dubai World’s debt and the issuance of bonds by the Dubai Government indicate that Dubai is in the heart of the economic recovery in the UAE,” he said, while noting that Dubai’s non-oil sectors, excluding real estate, maintained their growth through 2009 despite a downturn in most global economies.

“This is mainly because of Dubai’s strong trade links with Asia and growth in the tourism sector towards the end of the year…we expect continued expansion in growth-driving non-oil sectors such as logistic services and tourism although the real estate decline is still putting downward pressure,” he said.

As for the UAE, the largest Arab economy after Saudi Arabia, Ahmed said the Washington-based International Monetary Fund projects real GDP growth of 3 to 3.5 per cent in 2011 compared with an estimated 2.4 per cent in 2010.

He said higher growth in 2010-11 would be a result of an increase in the UAE’s crude production due to strengthening global oil demand as well as expansion in the country’s trade and tourism sectors.

His forecasts for the six-nation Gulf Cooperation Council showed real GDP growth could be around 4.5 per cent in 2010 and 6 per cent in 2011.