The economic changes that have transformed Dubai into the city it is today.
Dubai is an important tourist destination and its port (JebeL Ali) operates at the centre of the exporting trade in the Middle East. With the introduction of the Dubai International Financial Centre (DIFC) in 2004, it has allowed Dubai to develop as a global hub for service industries such as IT and finance.
The government has set up industry-specific free zones throughout the city in order to attract foreign businesses and this has been Dubai’s greatest economic achievement. The economy has benefited from new technological advances of information and communication by the introduction of The Dubai Internet City and Media City. Dubai has tempted many established media companies, such as CNN, to base their Middle East operations in the city.
Dubai is the second wealthiest emirate in the UAE, after Abu Dhabi which is the capital state. Most tourists believe Dubai’s revenues came primarily from oil but in fact it only used a moderate amount of oil reserves to generate the infrastructure for trade, manufacturing and tourism, in order to build up its economy.
About 95% of Dubai’s Gross Domestic Product is not oil-based. It is expected that by 2010, oil will account for less than one percent of Dubai’s GDP and tourism to produce 20% of the GDP. These figures explain why Dubai has had to become a more dynamic and diversified economy in order to survive the decay of fossil fuels.
In the early 1990’s there were only a handful of hotels available for tourists and Dubai never had high oil revenues like Abu Dhabi so something had to change. The Burj Al Project in 1994 (Burj Al Arab Hotel) gave hope to the economy, as a long term strategy, an ambition to become the world’s top tourist destination.
Since then, Dubai has never looked back; it has rapidly changed into an investor’s playground with tourism rocketing sky high.
Being one of the favorite tourist destinations in UAE, Dubai has seen a tremendous change in its economy in the past 50 years or so. Some of the major investments in Dubai have been largely affected due to the recession that hit the global market in the recent past.
Even though Dubai’s economy was built on the back of the oil industry, most of the city’s banking and financial centers headquartered in the port area and service industries got largely affected as Dubai’s property market faced a major downturn somewhere during 2008-2009 as a result of the slowing economic climate. Most of its ongoing projects along with the jobs of the expatriates got massively affected. Also, it was made public that Emaar had approximately $70 billion credits and the state of Dubai additional $10 billion while holding estimated $350 billion in real estate assets.
As 2009 progressed, the circumstances turned even worse as the global economic crisis took its toll on Dubai’s property values, construction and employment as well. During February 2009 Dubai’s foreign debt was predicted to be around $80 billion, although it was not that much as compared to the sovereign debt globally. But still, Dubai remains one of the world’s best financial cities in the Middle East with purchasing power parity (PPP).
Dubai city hopes to accommodate 15 million visitors in 2015.