Dubai is a centrally planned free market economy, one built on the oil industry. However, today revenue earned from natural gas and oil actually accounts for less than 6% of the country’s Gross Domestic Product or GDP. Today, this country provides a valuable port for manufacturers from the western world and in fact, the majority of the financial centers and banks are located around the port. With a free trade in gold, Dubai is considered an important hub for gold trade.
The primary sectors for Dubai include transportation and tourism. Regarding transportation, industry specific free zones have been established by the government and with the fast growing Emirates Airline, this sector has grown significantly. Then for tourism, Dubai offers the largest manmade harbor in the world. Along with the free zones, Dubai also has an outsourcing zone designed for companies that provide outsourcing services. Overall, the economy of Dubai has been strong for many years with no let up in sight.
Dubai GDP Forecast
Regarding the Dubai GDP (Gross Domestic Product, Current Prices, US Dollars), in 2008 numbers were reported at $82.11 billion in US dollars. Initially, this country depended on the oil industry but today, it plays a very small role in the economy. The main sectors involved in creating GDP numbers include real estate, construction, trade, financial services, and entrepot, which is a type of trading post whereby import and export of merchandise takes place but without duties being paid. In fact, often these trades are completed at a profit.
Dubai Unemployment Forecast
Dubai is one of the seven emirates found in the United Arab Emirates in the southern portion of the Persian Gulf. Of the seven emirates, Dubai is the largest and for area, the second largest. Of the Dubai population of 1.78 million as of 2009, approximately 65% live in the capital city. The remaining people live and work as nomadic herders. As of the first part of 2005, the government warned the people of Dubai that with low rainfall, the following three years would put a serious strain on food, meaning the majority would need to be imported. Over the years, the government of Dubai has taken several steps to stabilize the economy and overall has done a good job but even with transportation and tourism high, followed by opportunities in a number of other sectors, the primary problem remains the Dubai unemployment rate. Today, experts report this rate is anywhere from 40% to 50%, which is very high. This coupled with a high inflation rate, seven years of recession, and a fast growing population, the government realizes things need to change. However, to work with the situation at present time, the Dubai government depends on foreign aid in the form of donations.
Dubai Inflation Rate Forecast
On a positive note for this country’s economy, the Dubai inflation rate experienced at decline of 1.3% in January of 2010. With this, Dubai enjoyed the lowest rate in the past year. Other changes seen include the price of non-alcoholic beverages and foods going down by 2.3% and communications declining by 7.8%. While this is great news, the cost of living increased. Because of this, the Deutsche Bank believes that Dubai and the other emirates will experience a negative inflation rate.
Dubai Current Account Balance Forecast
One surprise was with the Dubai current account balance and trade. During 2009, surpluses were reduced primarily because of lower oil prices. In fact, the surplus for trade dropped by 33%. With this, numbers went from Dh 231.1 billion in 2008 to Dh 154.8 billion. Then for the current account balance, a decline was also seen, dropping by 65% taking numbers from Dh 81.8 billion in 2008 to Dh 28.8 billion in 2009. The primary reason for the drop in trade surplus was due to reduced exportation of hydrocarbon. With the current account balance changing, the debit balance of services also decreased. However, the credit balance of services increased slightly during 2009. Additionally, net outflow of funds by the non-bank sector increased although the increase was very slight.