DIFC accounted for 1.1% of UAE's GDP in 2009Press Release19 Dec 2010 09:27 am
- Total value added of the DIFC sub-economy in 2009 was USD 2,8 billion (2008: USD 2.8 billion), or approximately 1.1% of UAE GDP as estimated by the IMF, and 1.83% of the UAE's non-oil GDP.
- The DIFC accounted for approximately 3.8% of Dubai's estimated 2009 GDP.
- The financial sector accounted for 73% of the total value added, with 24% contributed by business services, and 3% by public administration
- The contribution of business services increased by 25% in 2009 compared to 2008
- At end December 2009, there were 706 active companies at the Centre, which has since grown to 782 companies as at November 2010
The DIFC, the UAE-based financial and business centre and gateway between the Middle East, Africa and South Asia region (MEASA) and the world, today issued its third annual Economic Activity Survey Report, updating the market on the size and level of economic performance of the DIFC sub-economy during 2009 and its contribution to the UAE's GDP.
The economic survey undertaken by the DIFC Authority is based on international practices in national accounting, and measures output, intermediate consumption and ultimately the gross value added produced within the DIFC district by entities registered in the Centre.
H.E. Ahmed Humaid Al Tayer, Governor of the DIFC said:
"The consistent and uniform contribution to the UAE's economy during one of the most severe financial crises the world experienced proves the success of DIFC's strategy. We continue to build a business ecosystem that supports the growth of our clients and is attracting more companies to the Centre. The DIFC is a testament to the strength of UAE's dynamic economy and the success of its diversification programme. We have already seen record financial and monetary activity this year and we are confident that this healthy DIFC sub-economy will continue to have a significant impact on the economical growth of both Dubai and the UAE in the future."
Despite the global economic challenges, the number of active companies in the DIFC in 2009 remained stable at 706, a similar level to 2008. These active companies comprised 292 regulated companies (234 Authorised Firms, 56 Ancillary Service Providers and two Authorised Market Institutions) and 410 non-regulated companies offering business infrastructure and services necessary for the activities of regulated firms.
Dr. Nasser Saidi, Chief Economist and Head of External Relations, DIFC Authority, said:
"The consequences of the quasi-meltdown in financial markets hit emerging economies and the GCC countries through two main channels: the decline in equity prices and the credit crunch, hence weakening the financial sector contribution to growth. As 2009 progressed, it became increasingly clear that an economic recovery was underway, while slow. I would like to thank to all the companies within the DIFC who shared their financial information with us and enabled us to prepare this report. While the report is meant to measure the economic performance of the DIFC sub-economy and its contribution to the UAE's GDP, as well as help the DIFC Authority formulate its strategy, we hope that it will assist our clients in forecasting future demand for their services & products."
The third survey of Economic Activity at the DIFC for the year 2009, conducted by the DIFC Economics Unit, places the total value added of the DIFC sub-economy at USD 2,772.5 million or approximately 1.1% of the UAE GDP (AED 914 billion) and approximately 3.8% of Dubai's estimated 2009 GDP. The data were collected using the state-of-the-art online portal DIFCSTAT, which manages all official and administrative communications between DIFCA and licensed companies. Around 57.5% of the 706 registered companies (406 companies) responded to the survey. They constitute the largest firms in the Centre and make the bulk contribution.
According to the figures, nominal GDP declined 2.4% between 2008 and 2009, in line with the decline of financial activity in most major financial centres around the world due to current financial crisis. Moreover, the minimal decline also reflects a sign of resilience by the companies operating within the Centre. The slight drop had a rather uneven sector distribution, as the financial sector GDP declined by almost 9% in 2009 and the public sector by more than 15%, reflecting a process of profound restructuring in DIFCA. However this combined drop was offset by the 25% increase in business services.
The financial activities sector accounted for 73.2% of the total value added in the DIFC, while the business services accounted for 24.2% and the rest being attributed to wholesalers, catering and public administration.
Within the financial activities sector, the broadly categorised Activities auxiliary to financial service and insurance, which include, capital market advisory and investment banking has gained an importance on par with the core financial activities. While professional, scientific and technical activities dominated the business activities.
Another study, commissioned by the DIFC and conducted by McKinsey in Q1 2010, found that for every dollar of revenue generated by the DIFC, the UAE economy benefited by approximately USD17 in the form of residential rent, schools, services and the injection of disposable income into the UAE economy.