Dubai Fact of the Day

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“The entire business model needs a radical reset,” says one company executive, who believes distress among the city state’s corporates will deepen this year. “Costs are too high to sustain these levels of activity.”

Dubai’s rulers, who brook little criticism of the economic model that transformed the emirate into the region’s trade, finance and tourism hub, appear to agree. Sheikh Mohammed bin Rashid al-Maktoum, its dynamic leader, last year turned to consultants to pull Dubai out of its funk, convening a series of meetings with business bosses to discuss ways of boosting the economy, such as cutting fees and privatising state entities to revive moribund capital markets. Dubai’s executive council has hired the PwC consulting arm Strategy& to turn some of those ideas into policy.

“The brainstorming sessions were meant to [help] understand the challenges and come up with ideas for the private sector,” says one consultant. “The executive council knows there is now a pressure to implement.

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Dubai is credited with developing one of the region’s most diversified economies, founded on trade and transportation. It has branched out into tourism, manufacturing and, more recently, finance, but it is still heavily dependent on real estate, which accounts for a quarter to a third of GDP growth.