Dubai, beautiful, full of potentials and the land of economic advances. Or was it a long time ago? Dubais economy has been growing so little in the past decade that many believe it cant be even called growth.
Surveys show that the economy has seen a 1.94 percent growth in 2018 which was Dubais slowest pace since 2009 when the economy crashed due to a debt crisis.
A big part of Dubais economy is focused on tourism and international business services. These two sectors have been hurt by a rough patch amid a fall in the real estate market.
Experts say a weakening external backdrop, a strong US dollar and the ongoing correction in the property market are headwinds for a number of vital sectors.
Property prices in Dubai have fallen by more than a quarter from their peak in 2014. It is expected that the prices fall 5 to 10 percent in the near future as a result of a continued gap between supply and demand.
What happened in 2009 that still haunts the sheikdom? Collapsing property prices put Dubai in a debt crisis, so to tackle the situation, Dubai asked a 20 billion dollar bailout from oil-rich Abu Dhabi. After that, Dubais GDP grew at 4.8 percent in 2013 before starting to decline and the drop accelerated last year after the property sector slumped and the number of tourists stagnated.
The UAE needs to attract 20 million tourists each year to make ends meet. But official figures indicate that in the past two years, the number of tourists stood at just under 16 million and in the first half of 2019, Dubai welcomed 8.3 million visitors.
Standard and Poor's say the slowdown that started in 2014 is forecasted to carry on through 2022 due to low oil prices, fallout from the US-China trade war and political turmoil.
These days Dubai faces high public debt amounting to around 124 billion dollars or 108 percent of gross domestic product. This debt is divided between the government and state-linked companies.
The government has recently announced a series of initiatives to boost growth and S&P says it expects Dubai's economy to pick up to 2.4 percent this year, largely due to the completion of projects related to the international trade exhibition Expo 2020. But at the same time, it says the growth is unlikely to stay high since a trade war between China and the US is killing the economy across the world.
Lower regional demand due to the US-imposed sanctions on neighboring Iran is another factor. It will have a negative impact on transit trade which is an important contributor to Dubai's economy.