The world economy has partially rebounded from the global financial crisis, though the recovery continues to be geographically unbalanced and a number of risks remain. The IMF’s World Economic Outlook update in June 2011 estimates 2010 global economic growth at 5.1%, bouncing back from a drop of 0.5% in the crisis-hit 2009. The unbalanced economic growth is evident as the emerging market economies have recovered and are growing at a faster pace than their advanced counterparts.

A favourable global and regional environment buoyed by higher oil prices, along with Dubai’s growing economic links with Asia, is helping Dubai’s economic recovery. Increased economic diversification has benefitted Dubai, as the economy grew 2.4% (in real terms) in 2010, led by a strong boost from the tourism, logistics and trade sectors. Dubai is benefiting from its leading position as a regional business, tourism and logistics hub with strong links to emerging markets (Asia specifically) and improved competitiveness. Investor sentiment was boosted after the Dubai World debt restructuring was completed in mid-2010, leading to a positive impact on the equity markets and resulting in Dubai issuers regaining market access. Key indicators relating to trade and logistics, tourism and investment point to the resilience of the emirate to regional events and underscore its role as a safe haven for conducting business in the region.

The year 2010, coming out of the Great Recession of 2009, was a recovery year globally and regionally, which reflected on the activities of the Dubai International Financial Centre (DIFC). With a growing number of firms (increasing from 704 in 2009 to 773 in 2010) joining the DIFC from the emerging market economies (notably China and India), the DIFC total value added (GDP for short) reached USD 2.92 billion in 2010 after recording a slight decline in 2009. This translates into a 5.2% growth rate, consistent with growth across other regional financial centres. Total value added in the DIFC in 2010 represents some 3.6% of Dubai’s GDP which is estimated at AED 330.83 billion or USD 81.96 billion.

In the annual economic survey we focus primarily on the reported results from the 477 respondents to the survey plus the DIFC public sector, (i.e. DIFCA, DIFC Judicial Authority and DFSA) which account for the bulk of total value added of the 773 DIFC licensed and operating companies as of end-2010. The responding entities represent some 62% of the registered company population but the bulk (some 90%) of total value added estimated from employment data. The performance of economic sectors and activities of the DIFC entities at current prices in 2010 can be broken down as follows: the financial sector recorded a value added of USD 2.1 billion while its contribution to total value added of DIFC was 72.0%. The balance, amounting to USD 816.2 million was generated by the business sector (e.g. accounting services, management consultants, legal entities, restaurants, retailers, and other service providers) and the public sector, each contributing 26.5% and 1.5% respectively.

While the contribution of companies to the value added of DIFC can be estimated as above, the indirect contribution of the DIFC workforce to the Dubai and UAE GDP cannot be as accurately accounted for. As residents in the Emirate, the DIFC labour force contribute to the economy as consumers who travel, shop, eat, have relatives visit from abroad (who also shop, eat, travel within the UAE), consult doctors, drive cars, buy real estate all causing an increase in demand for key goods and services in the Emirate – leading to what is called a multiplier effect. This value is more difficult to estimate, but given that the average DIFC workforce compensation falls in the higher end, it is a safe assumption to make that the stimulus to the economy from their spending is substantial. A conservative estimate of a marginal propensity to consume at two-thirds implies that the DIFC workforce generated a multiplier effect of over USD 4.4 billion on the Dubai economy in 2010, about 5.4% of Dubai’s GDP.

This year’s questionnaire also included a detailed labour force survey, to track not only the employment growth in the DIFC but also the educational attainment, distribution and average pay for the diverse workforce. In 2010, the DIFC had about 11,331 full time employees, of which men formed the major share, at 65.5% (7,427). There is an estimated drop of 0.98% in total employment compared to 2009, with a significant decline attributable to the public administration sector, as a result of rationalization and restructuring measures. The percentage of UAE nationals in the total was 2.2%. The DIFC labour force has a high level of educational attainment, with over 85% being university graduates or post-graduates, and with similar levels of educational attainment for men (86.9%) compared to the women (84.9%).

Click here to download the report on DIFC’s Economic Activity Survey Results 2010, complete with comprehensive tables and charts.