UPDATE 1-Dubai economy grows 4.1 pct in H1, seen staying strong

Martin Dokoupil
Reuters Middle East

* Wholesale and retail business up 3.8 pct, hospitality up

16.1 pct

* Hotel guests in Dubai increase 9.6 pct in H1

* Growth may be higher in 2013

* Huge new real estate development to support growth

* Large debt repayments still overhang economy

DUBAI, Nov 26 (Reuters) - Dubai's economy expanded 4.1

percent from a year earlier in the first half of this year,

official data showed on Monday, indicating the Gulf's main trade

and financial hub is holding up well in a weak global


Foreign trade, including re-exports, rose 11.4 percent in

the first half, according to Reuters calculations. That was

roughly half the growth rate seen a year ago; in addition to

global conditions, international sanctions against Iran over its

nuclear programme have hit Dubai's trade with that country.

Nevertheless, Dubai's gross domestic product growth in the

first half was faster than 3.4 percent recorded in 2011. A major

reason was booming tourism.

Hotel guest numbers in the emirate jumped 9.6 percent to 5

million in January-June, while hotels and restaurants saw a 16.1

percent surge in their business, said Arif Obaid al-Muhairi,

executive director at the Dubai Statistics Center.

"These indicators are moving towards growth because of the

diversity of Dubai's tourism product," he said in a statement.

"That helps attract more tourists, which reflects positively on

demand in related activities and improves performance of the

local economy."

Wholesale and retail businesses, which make up nearly a

third of Dubai's GDP, grew 3.8 percent in the first six months

of 2012. The real estate and business services sector rose 1.5


The Dubai housing market, where prices and rents crashed in

2008-2009, has been recovering gradually but bank lending in the

United Arab Emirates remains sluggish.


Muhairi said the Dubai government's latest plans for huge

tourism and retail developments would help boost tourist numbers

and contribute to economic growth.

Dubai's ruler Sheikh Mohammed bin Rashid al-Maktoum

announced on Saturday a plan to build a massive complex that

would include 100 hotels, the world's largest shopping mall and

a park larger than London's Hyde Park.

"We see a strong growth outlook for Dubai next year,

supported with a continued favourable outlook for consumption

and a gradual pick-up in investment," said Monica Malik, chief

economist at EFG-Hermes in Dubai.

Dubai is still restructuring billions of dollars of debt in

the wake of the property crash, and its entities are expected to

face nearly $50 billion of liabilities maturing between 2014 and

2016. However, Malik said this debt overhang would not prevent

the emirate from obtaining sufficient financing.

"We see Dubai continuing to access foreign funding, which

remains vital both for supporting the investment programme and

for the debt management position."

The government has said it expects Dubai's GDP to rise more

than 4 percent in 2013.

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