Economy in Dubai Set to Experience Increases
The financial performance of Dubai in the time since the 2009 crisis indicates that the Emirate is headed into a fresh phase of “rapid growth,” according to a recent report by the DEC. The Crown Prince of Dubai and Executive Council Chairman wrote the report’s foreword, noting the dynamic, diverse and flexible conditions in Dubai, where the economy has kept pace with developments around the globe and across the region.
The report figures indicate that Dubai has been successful in overcoming the impacts of the worldwide crisis. The report also followed developments that would place Dubai as a global hub for finance and business, according to the Crown Prince.
The report, entitled “Dubai Economy 2012,” compared the emirate’s economic performance from 2011 against a five-year period from 2006 to 2010. In spite of the economic slow down that occurred in 2009, the economy of Dubai has experienced a stable period of growth in the last two years.
GDP growth in Dubai came in at 3.4 percent for 2011, up from the 2010 figure of 2.8 percent. The economy contracted by 24 percent in 2009. Stimulus provided by the UAE and Dubai governments helped to create the rebounded economy.
The major trading partners of Dubai were also mentioned in the report, with particular note given to resilient partners like China and India. Credit was also given to the tourism sector, which contributed to the economic gain experienced in the years since 2009.
Industries such as construction and real estate felt the effects of the global crisis, according to the report.
Dubai Budget Puts the Focus on Creating Employment and Growth
Dubai’s recent budget was welcomed by the private sector, which noted that the inclusions were like an ideal gift for the new year, and set a positive tone for the emirate’s economy.
Revenue will increase by 7.8 percent in 2013, according to a recent announcement by the Dubai government, reaching Dh 32.63bn with spending of Dh 34.12bn. These figures resulted in a budget deficit of less than 0.5 percent of Dubai’s GDP.
Ruler of Dubai and Prime Minister and VP of the UAE, HH Shaikh Mohammad Bin Rashid Al Maktoum, gave budget approval.
Department of Finance Director-General, Abdul Rahman Al Saleh, stated that the 6 percent increase in spending was put in place to offer economic support and avoid sacrificing the government’s strategic purposes. Those purposes include deficit reduction and a balanced general budget.
A commitment to avoid using oil revenues to fund projects within the emirate’s infrastructure was also noted in the report.
Government fees will rise over the 2012 levels, increasing 9.8 percent and totaling 62 percent of overall government revenue, reflecting the forecasted growth rates and as a result of real economic growth. These fee increases are also a reflection of the diversities and developments in government services and follow the policy implementation that occurred after the 2009 crisis and affecting government fees.
Tax revenues are set to rise by 15 percent in 2013 and will represent 23 percent of overall government revenue. Net oil revenue increased by 11.8 percent, resulting from increased oil prices.
Government spending sits at the 39 percent level and includes public sector wages and salaries. This affirms government support for HR and job creation reaching 1,600 positions with Dubai.
Admin and general expenses make up about 24 percent of the emirate’s budget and reflect a commitment to continue development in institutions and government services for both residents and citizens.
Approximately 11 percent of overall government spending is from grants and subsidies, which rose by 67 percent over last year’s figures. Charities, non-profits, sporting and housing subsidies were included in that total.
Around 16 percent of spending is marked for infrastructure project completion, while around 6 percent goes to servicing debt. Social development received an allocation of around 26 percent, while the safety sectors (such as security and justice) received around 23 percent.
Around 35 percent of the budget was allocated for transportation and infrastructure, with Dubai continuing on the path to growth and the expansion of government support for new projects.
Youth entrepreneurship has been a major focus of the recent Dubai budget, with a public benefit fund being established to offer support to SME and families. About 26 percent of government spending from education, community development and health care have been allocated to this fund, according to Institute of Chartered Accountants of India (Dubai Chapter) chairman James Matthew.
In spite of higher government spending, up to Dh 34bn, the budget deficit has dropped to 0.5 percent of the emirate’s GDP, a figure well under the global guideline of 3 percent.
Fiscal policies were adhered to in the recent budget, according to Arif Abdul Rahman Al Ahli, by utilizing the regular revenues to fund regular expenses and resulting in a Dh 204mn surplus and a financially sustainable situation.
Saudi Budget Includes Spending Increases
The government of Saudi Arabia plans to spend $219bn (or 820bn riyals) this year, representing a 19 percent increase over the 2012 budgeted expenditures of 690bn riyals, according to recent statements made on state television.
Forecasted revenues of 829bn riyals are included in the 2013 budget, significantly more than the 702bn riyals included in the original budget for 2012.
More complete details are expected to be released and analysts note the Saudi Arabian government’s tradition of making conservative forecasts for oil earnings and expenditures, which leave plenty of room to actual spending and budget surpluses reported at higher levels than initially expected.Paul Holdsworth, Staff Writer, Gulf Jobs Market News