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DIFC Economic Activity Survey 2009
Posted: 02-Jan-2011
Posted: 02-Jan-2011
Executive Summary:
The world economy has been experiencing one of the most severe crises in peacetime since the Great Depression. The financial sector crisis in 2008 was so sudden and powerful that virtually no country escaped its effects. 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. However a powerful hangover from the excesses of 2004-07 continues to display its effects. Weak bank lending, sluggish capital flows, higher costs of funding and debt problems in key sectors(commercial construction) or countries (parts of Europe), led to a significant reduction in banking & financial activity.
The GDP of the DIFC sub-economy in 2009 added up to about USD 2.8 billion, demonstrating resilience in the throes of the “Great Recession” and the international financial crisis. However, this performance while creditable, translated into a decline in DIFC GDP of some 2.4% compared to the peak performance in 2008, as the repercussions of the global crisis reverberated through all financial centres in the world.
The GDP has been calculated through a sequential process. In the first phase were collected the figures from all DIFC-registered entities which turned out to have reached USD 7 billion, at current prices, equivalent to about 10% of forecasts for Dubai GDP in 2009. However this figure comprises the operations of the Head Offices and Holding companies which tend to record in Dubai profits actually attributable to operations worldwide. So in the second phase in accordance with the prescriptions of national accounting practices, we eliminated these profits from our calculations. In the third phase we added the estimate of value added for companies that did not respond to the survey, mostly small businesses.
In this report we focus primarily on the actual results from the 406 respondents to the survey plus the DIFC public sector, (i.e. DIFCA, DFSA and the DIFC Courts) which account for the bulk of total value added of the 706 DIFC licensed companies as of end-2009. The responding entities represent some 57.5% of the registered company population but the bulk (close to 85% of total value added as estimated from employment data).
The performance of economic sectors and activities of the DIFC entities at current prices in 2009 can be broken down as follows: the financial sector recorded a value added of USD 2 billion while its contribution to the GDP of DIFC was 73%. The rest, which totaled USD 738 million, was produced by the business sector (e.g. accounting services, management consultants, legal entities, restaurants, retailers, and other service providers) and the public sector.
Our survey questionnaire and results encompassed a labor force survey. In 2009, DIFC full time employees amounted to 11,436, of which 66% i.e. 7,498 were males and 3,938 females. This compares to some 13,566 full time employees in 2008, a decline of some
15.7%. The percentage of UAE nationals in the total was 3%.
To read the complete "DIFC Economic Activity Survey Report for the year 2009", please visit http://www.difc.ae/index.php/download_file/-/view/2040/
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