Will Dubai Expo 2020 Have the Economic Impact the UAE Hopes For?

The countdown to Dubai Expo 2020 is nearly over, but the spread of COVID-19 may derail Expo 2020 and stop it from delivering the economic boost the UAE is banking on.

  • By externalwire | March 3, 2020,6:35 am
Will Dubai Expo 2020 Have the Economic Impact the UAE Hopes For?

Dubai has been preparing to host the Dubai World Expo 2020 since 2013. The ‘World’s Greatest Show’ should be an opportunity for Dubai to shine on the world stage and share creative ideas and cutting-edge technology that addresses the universal challenges of our times.

An estimated 25 million visitors, 70% from outside the Emirates, are expected to attend what promises to be the largest event ever held in the Arab world, from October 2020 to April 2021. Organizers of the Middle East, Africa, and South Asia’s first World Expo have themed the event “Connecting Minds, Creating Futures,” a nod to the need to build partnerships to tackle the major transnational challenges facing the world.

Economic Catalyst

The value proposition for Dubai is extremely positive and Expo 2020 represents an important chance for it to show-off its international business credentials. It also presents a valuable opportunity to diversify the oil-dependant economy, from the building and construction phase, through to the hospitality sector gains from visitors expected to pour in from October 2020-April 2021.

Government spending, including funding for Expo 2020 projects, has already provided a welcome boost to the UAE economy, currently sagging under the burden of geopolitical tensions, OPEC-led oil output cuts, and the ongoing weakness in the non-oil sector.

Consultancy firm EY estimates the six-month Expo will contribute AED 22.7 billion ($ 6.2 billion), equivalent to 1.5% of the UAE’s annual GDP. The top three sectors expected to benefit during that period are restaurants & hotels (AED 8.9 billion), events organization & business services (AED 7.7 billion) and transport, storage & communication (AED 2.6 billion), the report predicts.

The IMF supports EY’s predictions, stating in November 2019, “Economic activity is recovering and likely to pick up more momentum next year, helped by Expo 2020 and existing fiscal stimulus”.

Like other financial organizations, the IMF also stressed that sustaining robust non-oil growth after Expo 2020 must remain a key priority for the UAE. Event organizers made sustainability one of the key thematic pillars of the event and appear committed to ensuring the massive infrastructure investment does not become a financial burden.

EY expects the legacy phase (2021 to 2031) to contribute AED 62.2 billion ($16.9 billion) in GDP primarily from the redevelopment of the festival complex into ‘District 2020’.

“Over 80% of the Expo built environment is planned to be retained for District 2020, and eventually expand into a city covering more than four million square meters. District 2020 companies will be focused on technology and innovation, including a mix of corporations and SMEs. The DEC [Dubai Exhibition Centre] is also expected to be a key facility in the site,” the report states.

COVID-19 Threat 

World Expo’s are designed to tackle global challenges, but one of the most prevalent crises, in the form of novel coronavirus or COVID-19, is now threatening the hard work and investment Dubai has made to host the flagship event. Troublingly, Iran, the UAE’s neighbor from across the Gulf, has become one of the hardest-hit regions and the coronavirus is now present on all continents, except Antarctica,

The same factors that make Dubai the perfect location for an international mega-event like the World Expo, also make it vulnerable to disease epidemics. It is positioned as a gateway between east and west and situated strategically within four hours (flight time) of a third of the world’s population. It is home to the world’s busiest international airport, connecting over 240 destinations across six continents, and has a large hospitality sector capable of welcoming large numbers of visitors.

On February 23, the UAE Ministry of Health and Prevention declared two new cases had been identified, bringing the confirmed cases of COVID-19 to thirteen in the UAE. One of the most recent cases is in an elderly Iranian visitor, believed to be in a serious condition in hospital.

In a statement on Wednesday, officials declared that the UAE is “well prepared and equipped for the worst-case scenarios” and has quarantine facilities and screening equipment to manage the disease outbreak.

“We are quite satisfied that we have taken all the necessary steps needed to preempt the spread of the virus at all levels, without pushing the country into a state of unwarranted panic,” the UAE National Emergency Crisis and Disasters Management Authority official said.

Authorities have, however, now issued a travel ban for Iran and Thailand, and suspended all flights to and from Iran.  Public events and gatherings, however, are continuing as normal inside the Emirates. The travel restrictions are simply “a precautionary measure”, part of the UAE’s “strict monitoring and prevention of the spread of the new coronavirus, COVID-19,” state news agency WAM reported.

The announcements come a week after rating agency Standard and Poors warned the disease outbreak could be bad for Gulf Cooperation Council (GCC) countries’ economies, and particularly deleterious to Dubai’s hospitality sector and Expo 2020 visitor numbers.

“Virus-related travel restrictions, if not lifted as we expect, could weigh on the GCC’s hospitality industry, but more so in Dubai, which received almost 1 million visitors from China in 2019,” the agency told Reuters.

Senior Director of S&P Middle East and Africa, Mohamed Damak said if the travel restrictions stay in place until March, the coronavirus outbreak would certainly reduce regional visitation and potentially impact investments and commodity prices.

Damak added, in that scenario, the number of visitors expected to attend the six-month Dubai Expo 2020 would also drop.

Concerns for Dubai Expo 2020 have also been heightened by recent comments from the International Olympic Committee member Dick Pound. He revealed the IOC is more likely to cancel the Tokyo 2020 Olympics than postpone it if coronavirus is not bought under control.

Due to the size and number of “moving parts” involved in the Olympics it may be too difficult to postpone if the virus threat continues, said Pound. The Olympics are scheduled to take place over 17 days from July 24 to August 9, 2020. The Canadian IOC veteran estimates a decision on the 2020 Olympics will be made in the next three months.

“In and around that time, I’d say folks are going to have to ask: ‘Is this under sufficient control that we can be confident about going to Tokyo or not?”‘ he asked.

Organizers are yet to comment on how COVID-19 is affecting preparations but, according to a ‘Construction Week’ article, security and disease prevention protocol for the event were discussed by the Expo 2020 Dubai security council at a meeting on February 23.

Commander-in-chief of the Dubai Police and the chairman of the Security Council, Major General Abdullah Khalifa Al Marri reportedly presided over the meeting and was updated on preventive protocols against epidemic diseases, as well as, security preparedness and event marketing plans.

The sleek event website reads “Expo 2020 Dubai will host the world for 173 days, each one brimming with new experiences. It’ll be a time to create, collaborate and innovate. And it’s going to be fun. We’re talking eye-catching, mind-bending, taste bud-tickling, grin-inducing, good-weird, did-that-really-just-happen fun.”

The tongue-in-cheek jibe, “Come along, or spend a lifetime telling less interesting stories,” however, takes on a darker tone in light of the COVID-19 outbreak, as anyone traveling internationally is at a greater risk losing their life altogether as the virus spreads unabated.

Read also: COVID-19 Update: New Cases Decline in China, Rise in Middle East and Europe

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