Dubai’s economy grew 1.94 percent in 2018, the government said on Wednesday, hitting its slowest pace since a contraction in 2009 when the economy was hobbled by a debt crisis.
“A weakening external backdrop, a strong U.S. dollar and the ongoing correction in the property market are headwinds for a number of vital sectors,” said Monica Malik, chief economist at Abu Dhabi Commercial Bank.
The economy slowed from 3.1 percent growth in 2017, revised government data showed. The 2017 figure was revised from the previous growth figure of 2.8 percent.
Property prices in Dubai have fallen by more than a quarter from their peak in 2014. S&P said last month it expects prices to fall another 5-10 percent this year due to a continued gap between supply and demand, before steadying in 2020.
Dubai needed a $20 billion bailout from oil-rich Abu Dhabi to escape a debt crisis in 2009 caused by collapsing property prices, which had threatened to force some state-linked companies to default on billions of dollars of debt.
Analysts expect some economic recovery for Dubai ahead of 2020 when the city hosts the World Expo event.
The government said GDP growth was largely driven by the performance of trade related activities, which grew by 1.3 percent in 2018 from a year earlier, representing 18.1 percent of the total growth achieved last year. In 2017, wholesale and retail trade grew 0.9 percent.
It said real estate activity grew 7 percent in 2018 and accounted for nearly 25 percent of total economic growth.
The real estate sector growth was revised to 4.4 percent in 2017.
Growth in the transport and storage sector slowed down to 2.1 percent last year from a revised 8.4 percent in 2017.
London-based Capital Economics in a report said the property sector is likely to remain in the doldrums while a weakness in the global economy will weigh on Dubai’s manufacturing and logistics sectors.