Dubai (AFP)

With its tallest tower in the world, its huge shopping malls and artificial islands, Dubai gives a picture of prosperity, but to revive its economy at half mast, the city-state tries to woo more foreign investors.

The most diversified economy in the region, Dubai recorded a growth rate of 1.94% in 2018, half of that of 2017 and just over 2010 (1.9%), the year in which the emirate had emerged from a recession caused by the 2008 financial crisis and its own debt problem.

The vital real estate sector is declining, as is tourism and commerce. Many of the major projects, including Al-Maktoum Airport, which is expected to be the largest in the world, have been frozen.

In 2018, real estate transactions fell 21.5% to 60 billion dollars and the number of tourists stagnated at about 16 million.

"Dubai's growth has been modest (...) following the weakening real estate market and (due to) stagnant consumption," said MR Raghu, investment bank analyst at Kuwait Financial Center. (Markaz).

- Incentives -

"Growth is continuing, although we are not at 4.5% - the average between 2012 and 2016 - but it's pretty good given the situation in the world," says AFP Raed Safadi , chief advisor of Dubai Economy, the government agency in charge of development.

Optimistic, it expects a growth rate of 2.1% in 2019 and a robust 3.8% the following year because of the fallout from the World Expo organized in Dubai in 2020 (Expo 2020), which should bring, according to him, 35 billion dollars to the economy by 2030.

As an open economy, Dubai is sensitive to global trade tensions, the regional slowdown and the recession in Iran as a result of US sanctions, says Capital Economics, a London-based analyst firm.

"All this will weigh on the key sectors of logistics, tourism and manufacturing," predicts James Swanston, an economist at the organization.

The emirate has taken a series of incentives to maintain its position as economic hub, granting permanent residence to large investors and allowing foreigners to enjoy full ownership of their businesses, including outside the free zones.

The authorities also offer long residence permits to foreign investors, scientists and students. They also reduced the fees for hundreds of services, froze tuition fees and set up a committee to rebalance the real estate market.

With 3.3 million inhabitants, more than 90% of whom are foreigners, Dubai earns 70% of its income from taxes on various transactions, about 24% of taxes and profits of state-owned enterprises and only 6% of oil.

- Public debt -

"The economic slowdown is not new (...) But some media insist on problems in particular to show that Dubai is in trouble," says AFP Fahad al-Gergawi, CEO of Dubai Foreign Direct Investment, a public body.

"We have gone through similar economic cycles in the past," he added on the sidelines of Dubai Investment Week in late September.

According to Gergawi, Dubai was among the top 10 cities in the world to attract new investment over the past five years and among the top three cities to attract direct investment over the same period.

The government revealed on Sunday that in the first half of 2019, the emirate attracted $ 12.7 billion in direct investment, up 135 percent from the same period last year.

"In the medium term, Expo 2020 spending and monetary policies should support growth," says Raghu.

Dubai, one of the seven members of the United Arab Emirates federation, however, still faces a public debt of about $ 123 billion, or 110% of GDP, divided equally between the government and state-owned enterprises. .

About two-thirds of their debt will mature by the end of 2023.

Mr. Swanston, however, dismissed the risk of "a total default in payment" and it is likely that Abu Dhabi, the richest emirate of the federation, will come to "help as it did in 2009".

© 2019 AFP