Dubai's diversification model has right mix to re-accelerate growth, says BofA Merrill Lynch report
Source: BofA Merrill Lynch , Author: Posted by BI-ME staff
Posted: Thu July 19, 2012 11:20 am

UAE. According to a new medium-term outlook BofA Merrill Lynch Global Research Report ‘GCC 2020: Time to Shift Gears’, Dubai’s superior infrastructure investment and robust population growth have established solid foundations for its economic trajectory.

The report suggests that the emirate is set on course to outperform growth projections driven by job creation, improved funding and solid execution of its diversification strategy.

Stephen Pettyfer, head of MENA Research at BofA Merrill Lynch Global Research said, “Dubai has the right mix to re-accelerate growth. Given that there is a certain degree of duplication, competition or lack of distinct differentiation among various projects in the GCC, Dubai’s model of diversification stands out, having already achieved a critical mass, scale and a degree of competitiveness.” 

Jean-Michel Saliba, MENA economist at BofA Merrill Lynch Global Research added, “Dubai’s status as a regional financial, transport and logistics hub places it in a position to benefit from growth in neighbouring countries in a self-sustaining fashion.”

According to the report, Dubai’s vision has relied on an historical factor of path dependence, as well as an element of risk-taking in enacting forward-looking policies. It used its oil revenues early on to help fund the construction of Jebel Ali Port Complex to supplement Port Rashid, and its diversification efforts predate most other GCC country initiatives.

The report suggests that while the economy slowly recovers, Dubai is one of the best GCC cities in which to develop business. Its relatively small population of 2.1 million people and the ambitious objectives of the major Dubai-based corporates mean job creation should accelerate and support the real estate market.

Although the current working population in Dubai stands at 1.3 million, the emirate aims to create 950,000 new jobs by 2020, with retail, tourism and related sectors fueling growth.  This is an ambitious but realistic goal which would see the population increase on average by 4 percent, which will, in turn, drive further economic growth by creating:

• Incremental housing demand of 317,000 units which represents 94 percent of current stock.
• Retail sales increase of 5 percent per annum.
• More than 15 million tourists, up from a total of 8 million visitors in 2011.
• Air traffic levels to increase by 7.2 percent CAGR.
• A 35 percent increase in hotel occupancy.
• An additional 18,868 hotel rooms.

Pettyfer concluded by stating, “Dubai’s diversification model has proved successful in developing both infrastructure assets faster than other GCC countries, and a non-oil-based economy more geared towards trade and tourism. That gives the emirate a key regional competitive advantage in attracting talent and boosting non-hydrocarbon-related activities.” 

The full report can be seen by clicking here.

About BofA Merrill Lynch Global Research
The BofA Merrill Lynch Global Research franchise covers more than 3,300 stocks and 880 credits globally and ranks in the top tier in many external surveys. Most recently, the group was named Top Global Research Firm of 2011 by Institutional Investor magazine; No. 1 in the 2012 Institutional Investor All-Asia survey for the second consecutive year; and No. 2 in the 2012 Institutional Investor All-China, All-Europe and All-Japan surveys.

The group was also named No. 2 in the inaugural 2012 Institutional Investor Emerging Markets Equity and Fixed Income survey, covering Emerging Europe, Middle East and Africa; No. 2 in the 2011 All-Latin America and All-America Equity team surveys; and No. 3 in the 2011 Institutional Investor All-America Fixed Income and All-Brazil Research team surveys.

Additionally, BofA Merrill Lynch Global Research was named the No. 1 Global Broker by Financial Times/StarMine, as well as ranking No. 1 in the U.S. and Europe and No. 2 in Asia. The group was also named No. 1 in Asia and No. 2 in the U.S. in the Wall Street Journal Best on the Street 2012 Analysts Surveys. The group was also the winner of the Emerging Markets magazine’s EM Research Global Award for 2010 and 2011.

About Bank of America
Bank of America is one of the world's largest financial institutions, serving individual consumers, small- and middle-market businesses and large corporations with a full range of banking, investing, asset management and other financial and risk management products and services.

The company provides unmatched convenience in the United States, serving approximately 58 million consumer and small business relationships with approximately 5,700 retail banking offices and approximately 17,250 ATMs and award-winning online banking with 30 million active users.

Bank of America is among the world's leading wealth management companies and is a global leader in corporate and investment banking and trading across a broad range of asset classes, serving corporations, governments, institutions and individuals around the world. Bank of America offers industry-leading support to approximately 4 million small business owners through a suite of innovative, easy-to-use online products and services.

The company serves clients through operations in more than 40 countries. Bank of America Corporation stock (NYSE: BAC) is a component of the Dow Jones Industrial Average and is listed on the New York Stock Exchange.

Bank of America Merrill Lynch is the marketing name for the global banking and global markets businesses of Bank of America Corporation.

For more information, please visit www.bankofamerica.com

 

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