Amongst the seven states which make up the UAE, Dubai is the striver. Been blessed with far fewer oil reserves than Abu Dhabi, the dominant partner in the United Arab Emirates, it has worked hard to position itself as a major information & technology center for the Middle East.
Its strategic location & ease of doing business have appealed foreign direct investment to the tune of over $10bn in 2018, 43 percent above the previous year. Flows were greatly in hotel & food services (46 percent of inflows), followed by residential & commercial real estate construction (23 percent) arts & recreation (5 percent) and finance (4 percent).
However, while foreign trade, real estate, finance, and tourism are major economic drivers, logistic & other services related to the oil industry remain critical, & Dubai is reliant on the continued health of the oil sector, making its latest history something of a roller coaster. A decade back, in the depths of the recession all across the world, Dubai had to borrow over $20bn from Abu Dhabi to keep its formidable collection of government-related enterprises inclusive of Dubai World, its global investment vehicle afloat. The loan reassured the viability of global markets of Dubai.
In the subsequent years, however, various enterprises of Dubai have needed large-scale re-financing. Presently, some economic indicators are again falling. According to the latest report by Capital Economics, passenger traffic at Dubai International Airport has decelerated since the middle of last year. Property prices in January were 9.4 percent lower last year’s & were down a wrenching 25 percent from their peak, in 2014 (even though the report attributes the plunge more to oversupply than to the drop in oil prices).
Dubai’s strengths have drawn attention from Russia and also from the West, according to a senior fellow at the Washington Institute for Near East Policy, Anna Borshchevskaya. Shipping access & soft power projections are major priorities for Russia, she told Global Finance, & lucrative Dubai has become an ideal strategic platform.