Dubai GDP to hit 6% by 2012 – Citi

Dubai’s struggling construction and property industries will not stop the emirate from registering GDP growth in 2010, according to a Citi report.

Farouk Soussa, Citi’s chief economist for the Middle East, said that GDP growth would hit 1.6 per cent this year and steadily climb to about six per cent by 2012, despite an expected drop in investments over the medium-term.

He added that tourism, transportation and logistics were the industries that would most likely benefit from the growth.

But Soussa insisted that the emirate’s worst hit sectors amid the financial crisis, such as property and construction, could suffer a debt overhang that would “drag on growth in the future through a reduction in investment and knock-on effects to consumption”.

Property developers and construction companies would have to diversify their activities into other markets to avoid suffering from the construction industry’s continued depression, the Citi report said.

It added that the debt issues surrounding Dubai World could hamper the bank industry’s profitability.