The Dubai International Financial Centre (DIFC) recorded a strong economic performance in 2008, with its nominal Gross Domestic Product (GDP) rising to $2.8bn, a 47.1% increase from its GDP in 2007, according to the latest Economic Note issued by DIFC’s Economics Unit.
The growth reflects the substantial expansion of banking, financial and related activities in DIFC in 2008 and the large influx of new companies that were attracted by the region’s growth prospects, which continue to be strong despite the global financial crisis. Calculated according to the ‘value-added’ of the DIFC sub-economy, the GDP of $2.8bn accounts for 3.4% of Dubai’s GDP of Dhs302bn ($82b).
The figures published in DIFC’s ninth Economic Note are based on the results of the second Survey of Economic Activity in DIFC conducted by the DIFC Economics Unit for the year 2008. Data for the survey were obtained from questionnaires answered by 404 of the 715 companies that were registered in the financial district in 2008. The sample covers about 57% of the total number of registered companies including the largest companies in DIFC by volume of activity. Companies that did not respond were the smallest and the newest, or those that were registered, but were not operational in 2008.
Ahmed Humaid Al Tayer, Governor of DIFC, said:
“DIFC’s achievements represent the success of the UAE’s dynamic economic diversification programmes that have been guided by the vision of HH Sheikh Khalifa Bin Zayed Al Nahyan, President of the UAE; and HH Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai. The 2008 GDP figures validate the significant impact that DIFC is having on the development of both Dubai and the UAE.”
Abdulla Mohammed Al Awar, CEO of the DIFC Authority said, “DIFC has become a significant catalyst of economic growth in Dubai and the UAE. In 2008, the range of banking and financial services and expertise delivered out of DIFC expanded significantly. During that year, DIFC’s financial services cluster also played a key role in supporting and promoting investments in other sectors.”
Apart from its direct contribution to the GDP, the DIFC sub-economy also had a significant ‘multiplier effect’ on the economy. Dr. Nasser Al Saidi, Chief Economist of the DIFC Authority said, “DIFC’s contribution to the economy of Dubai goes beyond the value added produced within the borders of the financial district. Members of the DIFC community boost demand for both basic and luxury goods and services in the UAE by spending in sectors like travel and tourism, education, healthcare, real estate, retail, lifestyle and hospitality. As their earnings tend to be in the top brackets, the stimulus to the economy from their spending is substantial. Assuming a conservative average savings propensity of one-third, employees within DIFC generated a multiplier effect of over $3bn on the Dubai economy in 2008, a little less than 4% of GDP.”
The core financial sector of DIFC contributed $2.2bn worth of value added, which accounted for 78% of the DIFC GDP. The value added in the business sector totaled $527m, approximately 19% of the total GDP. Other non-financial sectors including retail and wholesale trade, hotels and restaurants, and public administration recorded a tiny contribution of 3% of GDP with $88m.