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Economic benefits from Expo 2020 immeasurable

If Dubai succeeds in its bid, Expo will bring in huge economic benefits before and after the event, and create thousands of jobs

If the UAE succeeds in winning the bid for World Expo 2020, there will be a new impetus to economic growth in the years to come, which will contribute a ‘sizeable share’ to the emirate’s gross domestic production annually, experts say.

Although consultants, economists and financial analysts are unable to give an exact figure if the expo bid succeeds, they have a consensus that the mega event will bring enormous economic benefits to the country by generating economic activities worth billions of dirhams and creating thousands of new job opportunities in various sectors.

An economist with a leading bank, who requested not to be named, said economic impact studies will be conducted after the selection process is over in November. He said five cities are in competition and the economic impact — tourism, travel, trade and labour — depends on the location of the expo.

“Dubai in particular and the UAE in general are expected to reap a good amount of economic benefit if Dubai wins the Expo 2020 bid. The benefits will be both economic and social,” said Atik Munshi, managing partner of Horwath Mak UAE, a member of Crowe Horwath International.

“With the added infrastructure investment required to create the facilities for Expo 2020, there is a surety of more jobs both directly and indirectly.”

The direct economic activity can be witnessed in the creation of the infrastructure, which will create a large number of jobs both in the construction sector and in the event management sector. The ancillary sectors like hotels, transport and leisure too will benefit in the coming seven years.

Benefits to last post-expo

“We should not forget the after-impact of the expo, which will by itself actually provide economic benefits in terms of additional investment that would be attracted due to the exposure the UAE receives from this expo,” Munshi said.

“The contribution of Expo 2020 to the UAE economy cannot be measured in one year as its impact will be both pre- and post-expo. Absolutely, the GDP will receive a boost.

“We expect to see more investment not only coming from visitors to the expo, but also from third parties due to the promotion of brand ‘Dubai’ which the Expo will undoubtedly do.”

Not always profitable

According to the Bureau of International Exhibition, or BIE, the previous expo editions had resulted in up to 30 per cent economic loss. Hannover Expo 2000 made a record loss of $1.2 billion while Knoxville Expo 1982 barely reached break-even revenue with only 22 countries participating. Therefore, the event itself does not generally create profit for the organisers, but there are positive spillovers that occur over a period of time.

“Host cities come under a global spotlight and this should have (a) positive impact on sectors such as hospitality, tourism, aviation and retail. In addition, construction and infrastructure-related enhancements stay after the event and contribute to a host city’s economy,” said Munshi.

Shanghai Expo had $4.2 billion event cost as well as more than $40 billion spent on infrastructure improvement to host the mega event in 2010. The six-month event generated $12 billion revenue and recorded $158 million profit while welcoming 73 million visitors, including the 4.25 million foreigners.

The BIE estimates that Milan Expo 2015 is expected to generate 70,000 job opportunities and 21 million visitors are expected during May- October period in 2015. However direct investment is estimated at €15 billion and economic benefits for Milan area will amount to €44 billion.

Jitendra Gianchandani, chairman and managing partner of Jitendra Consulting Group, said tangible benefits are difficult to measure, but otherwise it has infinite purpose to host such events. Basically, the principle purpose of this expo is to educate the folks and strengthen the good relations between the host and participating countries.

Revenues to increase

“I think at least five times more revenues can be generated over the cost incurred on the pavilions, rent, tax and other associated expenditures.

“I can’t estimate the numbers but, for sure, trade, tourism, hospitality and retail sectors will directly benefit and grow,” he said.

Citing historical trends, he said each participating country would be benefited, as mainly tourism will increase in participating countries. And the legacy of the event can be transformed into a museum, he said.

“Looking at the history of growth of the China, hosting of Expo 2010 in Shanghai, it has (had a) profound impact on their economy and I think we can reasonably expect economy to grow at least three to four times,” he said.

Habib Khan, general manager, Arabian Courtyard Hotel and Spa, said the expo will have a very positive impact on the economy of Dubai in particular and the UAE in general.

Infrastructure and jobs

“Dubai civic infrastructure is remarkable, but not good enough to take the load of 20 to 30 million extra visitors over six months,” he said, and added that a lot of job opportunities will be available in all sectors.

“You may witness a surge in overall construction-related activities, infrastructure, logistics, transportation and fabrication and installation sectors. Likewise, retail and hospitality will also benefit overwhelmingly,” he said.

Wael El Behi, general manager, Ramada Downtown Dubai, said recruitment market analysts are sounding extremely positive about hiring more employees.

“More opportunities have opened up and with the high number of hotels, FMCGs and retail divisions opening around the city. On an average, more than 11,000 job openings are posted online. This clearly indicates that a steady pace has been set and by 2013 onwards, more openings will encourage both newcomers and experienced management teams to find the right opportunity,” he said.

El Behi is confident that Dubai will set the perfect pace to host World Expo 2020 with their growing economy.

“In spite of the unstable global job market, the UAE has a relatively strong economic growth, which has simultaneously increased job opportunities in specialised fields,” he concluded.

muzaffarrizvi@khaleejtimes.com