The total value added by the Dubai International Financial Centre (DIFC) in 2009 was $2.8 billion, or 1.1 per cent or of the UAE’s overall gross domestic product (GDP) in 2009 and approximately 3.8 per cent of Dubai's estimated GDP, the financial centre said in a statement on Sunday.
According to its third annual Economic Activity Survey Report published today, the DIFC thus accounted for 1.83 per cent of the UAE's non-oil GDP.
The financial sector accounted for 73 per cent of the total value added, with 24 per cent contributed by business services, and three per cent by public administration.
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 statement said.
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.
“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," said Ahmed Humaid Al Tayer, Governor of the DIFC.
"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,” he added.
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.
“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," said Dr. Nasser Saidi, Chief Economist and Head of External Relations, DIFC Authority.
"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,” Dr Saidi added.
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 $2.772 billion or approximately 1.1 per cent of the UAE GDP (Dh914 billion) and approximately 3.8 per cent 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 per cent 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 per cent 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 nine per cent in 2009 and the public sector by more than 15 per cent, reflecting a process of profound restructuring in DIFCA. However this combined drop was offset by the 25 per cent increase in business services.
The financial activities sector accounted for 73.2 per cent of the total value added in the DIFC, while the business services accounted for 24.2 per cent 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 $17 in the form of residential rent, schools, services and the injection of disposable income into the UAE economy.