(MENAFN - Khaleej Times) Recovery of dubai?s economic growth is becoming more broad-based and gaining pace as the rebound in the uae as a whole is well on track bofa merrill lynch said on thursday
The dubai department of economic development or ded targets 4.7 per cent and five per cent growth for the emirate in 2014 and 2015 respectively as population growth accelerated to five per cent in 2013 exceeding government forecasts of 3.8 per cent researchers from bofa merrill lynch global research said in a report. in its latest review the international monetary fund (imf) increased its growth forecast for the uae the arab world’s second-biggest economy citing rising real estate prices and dubai’s world expo 2020 win. the imf said the uae is set to grow 4.4 per cent in 2014 compared with an estimate of 3.9 per cent in october. “with real estate prices rising at a fast pace the award of world expo 2020 has further strengthened growth prospects” the imf said in its world economic outlook 2014.
According to jones lang lasalle real estate prices in dubai climbed 33 per cent in the first quarter of this year from the same period in 2013 on the back of the winning bid to host expo 2020.
The bofa merrill lynch team after meetings with public sector policy makers affirmed that the uae recovery is well-entrenched and gaining pace.
“there is steady yet uneven progress in dubai gre deleveraging. locally the real estate recovery and improved banking sector liquidity are making for a constructive mood. all in dubai is likely to muddle through its challenges” the researchers said.
With a fading drag from construction and real estate activity dubai’s growth accelerated to a preliminary 4.9 per cent in 2013.
The dubai strategic plan (dsp) 2015-21 to be announced by september incorporates an ambitious but realistic growth objectives. the dsp is likely to focus on productivity growth including through regulatory framework improvements.
“the ded highlighted this was to alter the growth model which historically has relied on factor accumulation (capital and unskilled and semi-skilled labour) with limited productivity gains.”
The bofa merrill lynch team also noted that the dubai government remained committed to fiscal prudence. the dubai department of finance dof indicates the preliminary outturn for the 2013 fiscal deficit has likely outperformed the dh1500 million (0.4 per cent of gdp) target. the 2014 budget also targets narrowing the deficit to dh880 million (0.2 per cent of gdp).
“although expenditures are set to increase 11 per cent year on year revenues are budgeted to increase 13 per cent on increased fee revenue collection (increase in salik toll gates metro use and a hike in property registration fees). medium-term capital expenditures are guided towards 1-2 billion for now while the bulk of the expo 2020-related capex is set to take place in 2016-20” the bofa merrill lynch team said.
An expo 2020 committee regrouping all major stakeholders has been set up to work jointly on the infrastructure master plan and parse out the capital spending requirements to gres or the government the research team said.