New visas for Chinese visitors seem to have helped boost Dubai’s non-oil economic growth last month, according to a new report.
Growth in Dubai’s non-oil economy last month reached its fastest pace since August and had recovered back to the average rate of seen over the past six years, Emirates NBD bank said on Tuesday, noting that tourism and travel, as well as wholesale and retail, expanded at a good clip, though construction remained sluggish.
The bank tracks three non-oil economic sectors’ growth on a monthly basis via a survey of a range of indicators, including new orders, jobs and inventory levels.
An index reading above 50 indicates growth and vice versa.
Emirates NBD Dubai Economy Tracker last month was at 55.2 overall, up from 53.2 the previous month and the highest reading since August.
Travel and tourism was at 57.5, wholesale and retail at 56.1, and construction at 51.8.
"The introduction of visas-on-arrival for Chinese nationals – announced in September – may have contributed to the growth in [the travel and tourism] sector over the last couple of months," Khatija Haque, the head of Middle East and North Africa research at the bank, pointed out.
Indeed, the tourism sector has been targeted by the UAE as a whole as a key source of future non-oil growth for coming years and last month the Economy Minister, Sultan Al Mansouri, said the sector is expected to contribute 5.4 per cent annual growth over the next 10 years to reach Dh236.8 billion by 2026.
The UAE also has been aggressively targeting India, as well as China, as a source of tourism growth, with Dubai and Abu Dhabi seeking to capitalise on dozens of flight connectors to Indian city destinations, as well as boosting direct tourism to a growing number of attractions aimed at the burgeoning middle-class family market, highlighted by on Tuesday’s announced Sea World in Abu Dhabi, as well as Dubai’s Bollywood and other parks.
The country is also on its way to establishing itself as the cruise ship hub of the region and DP World’s chairman and chief executive, Sultan Ahmed bin Sulayem, said last week that it expects 157 cruise ship visits in the 2016/2017 season, up by 16 per cent on the year.
The Emirates NBD report said that despite the overall uptick, construction growth fell to a five-month low "amid reports citing subdued investment spending".
The government recently announced measures to spur new property investments by Emiratis will help lift the sector but those haven’t yet taken effect.
Employment levels also were sluggish, again with construction the main drag on growth.
"Job creation remained weak in comparison to the trends seen prior to mid-2015," the bank reported. "Sector data indicated a return to jobs growth in travel and tourism and wholesale and retail, but construction companies reported a drop in staffing levels for the first time since June."
The International Monetary Fund says it expects UAE economic growth to slow this year to 2.3 per cent from last year’s 4 per cent, before rising next year to 2.5 per cent. The non-hydrocarbon sector is expected to rise from 2.4 per cent to 2.7 per cent, while hydrocarbon sector growth remains flat at 2 per cent.

Source : The National