Report by QNB also warns of risk of overheating
Dubai’s successful bid to host the World Expo2020 is set to add an estimated 4.5 percentage points to GDP growth in the UAE amid forecasts an extra $10 billion of private sector cash will be injected into the GCC, a new report said.
However, the report by Qatar National Bank (QNB) also warned of potential risks of overheating the market and increases in debt as a result of holding big events such as the Expo and FIFA World Cup in Qatar in 2022 in such a small period of time.
Last month, Dubai beat off bids by cities in Russia, Brazil and Turkey to win the right to host the World Expo.
A report from HSBC estimated the event would attract $10 billion of private sector spending to cover all the costs of putting on the event – positively impacting consumption and investment growth and the jobs market, Trade Arabia News Service reported.
In 2020 itself, the Expo could attract up to 50 million visitors, based on the experience of previous events, providing a strong boost to tourism and consumption.
QNB Group said these factors should add an average 0.5 percentage points GDP growth annually in the run up to 2020 and an additional 1 percentage point in 2020 itself as an influx of people into the country boosted domestic demand.
The Qatar lender also said that Dubai hoped to reap long-term benefits from the 2020 Expo by leveraging the event as a catalyst for economic transformation.
It said the hosting location at Dubai World Central, which is close to the new Al Maktoum International Airport and Jebel Ali port, could become a strategic location for business and trade, leading to the creation of permanent jobs and communities and “a new era of growth for the UAE based on the development of human talent”.
The increase in activity in the UAE should lead to spillover economic benefits to the rest of the region, sustaining jobs and economic growth in the GCC, it said.
However, the report warned extra demand generated in the GCC infrastructure sector could create pressures on regional supply chains, driving up the cost of raw materials and fueling real estate and asset-price bubbles.
A higher cost of living could also erode the competitiveness of these economies, it said.