Economic growth in Dubai hit 4.4 per cent in 2012, driven by the manufacturing, transport and logistics sectors. The construction sector, however, shrank for the fourth year in a row, by 4.2 per cent.

The real estate sector recorded its first growth since 2008, rising by 1.7 per cent. Dubai’s economy grew faster than many analysts had expected, but growth is expected to slip slightly next year to about 3.9 per cent, according to Emirates NBD.

The bank also expects construction to start making a positive contribution to the economy in 2013 for the first time since 2008. The growth in 2012 is an improvement on 2011, when the economy grew by 3 per cent.

Dubai’s economy has recovered since shrinking by 2.7 per cent in 2009. Raza Agha, chief economist for the Middle East and Africa at Russia’s VTB Capital, says, “While headline economic growth of 4.4 per cent is still lower than non-oil growth in regional oil-exporting countries, an important caveat here is the much more significant role of government spending in those economies. In that sense, the quality of growth in Dubai is better and broader based.”