Dubbed the ‘world’s greatest show’ by its organisers, Dubai’s Expo 2020 will run from October until April 2021, and aims to be a global stage for business. But as pavilions are built and expectations climb, questions remain around whether the world fair can be a catalyst of trade deals – and if its legacy will last.
More than 80% of participants in Expo 2020 are looking to enhance their global trading network, according to the event’s website. With tens of millions of visitors set to attend and more than 190 countries taking part in the expo, there is vast opportunity for businesses to “win investment, forge agreements and promote international cooperation”, it adds.
Expectations are high: a report published last year by EY estimates that the UAE economy will see a Dh122.6bn (US$33.4bn) boost between 2013-31 because of the event, alongside Dh40.1bn-worth (US$10.9bn) of investments made in infrastructure over the expo period – most of which, it says, is likely to be retained post-event.
While GTR previously reported the benefits to SMEs pre-expo as a result of tender opportunities up for grabs, the long-term impacts of the event have been called into question.
“The nature of these events is that they don’t tend to have a very long-term impact. The economic boost has already happened in regard to construction and towards the property market,” Laura James, senior analyst for the Middle East at Oxford Analytica, tells GTR.
James says that there are likely to be some trade deals closed because of the event, but it’s “unlikely to be a game-changer”, as Dubai already has established trading partners and does a lot of transhipment. “I’m not sure that Expo 2020 is likely to produce a large number of new partnerships and deals that have a long-term impact that wouldn’t otherwise have happened,” she says.
World fairs vary when it comes to their success rate. Italy held the previous world expo in 2015, which saw the majority of visitors come from Italy, according to the EU Commission, making it harder for exhibitors to strike deals in new markets. Meanwhile, Dubai’s expo expects only around 30% of visitors to come from the UAE, with the remaining 70% travelling from other participating countries, resulting in a higher likelihood of discussions between counterparties in different countries.
James Binns, managing director and global head of working capital at Barclays, voiced his optimism around the event’s impact on trade while speaking on a panel at the GTR Mena conference last month. “Stop historically for a second and think where Dubai has come from. Dubai is by definition a trading nation,” he said. “What Dubai has done is created this incredible logistics network and infrastructure, which beats anything within the UAE and a thousand-mile radius. So, it’s created this platform for trade and I think for me, Expo 2020 is the next stage of the launch of this platform, publicising everything that the UAE has achieved and showcasing that to the world, so I am extremely positive.”
A legacy that lasts
The attention the event will bring to the region’s business activity was further emphasised on the panel. Svitlana Skrypnyk, general director at Kogex DMCC, said that: “Expo 2020 is a chance for Dubai and the UAE, to create awareness and publicity around the region and inform the world of what we already know, that Dubai is a great place to do business.”
She agreed with Binns that the expo will help to promote UAE as a platform for trade and that it will create “trust” for those looking to do business in the Middle East.
However, Oxford Analytica’s James is less optimistic about Dubai trade, and says that the delisting of port operator Dubai Ports World (DP World) from the Nasdaq Dubai stock exchange, in order to help its parent company Dubai World repay the billions of dollars it owes to lenders, is dampening optimism toward overall trade growth in the UAE.
“The delisting of Dubai Ports World and the general sense that its shares have been falling, shows that long-term optimism about it [trade] has been a bit more limited. I think that’s another aspect of the struggle and another suggestion that there’s not a huge amount of optimism for large scale changes.”
Last year’s EY report adds that an unquantifiable range of benefits are available to the UAE post-expo, including “improved trade relations at a country-to-country level from relationships developed during the expo” and “increased international profile of Dubai and the UAE as a place to do business, work and invest”.
Dubai Exports’ chief trade economist Ashraf Mahate, who also took part in the GTR Mena panel, agrees, saying: “every single country pavilion has got B2B meetings”, adding that “one of the important things about expo is it’s all about making connections, and that really is the key – the trade does not have to happen immediately, it doesn’t have to have happened on the 20th of October, on day one, it can happen a few months later”.
However, the economic impact of the legacy period is expected to be driven by the development activity and operations of District 2020 – a large, mixed-use innovation hub located at the expo site when the event finishes – and the effects of the expansion of the Dubai Exhibition Centre (DEC), rather than trading activity from UAE expo attendees. The gross value-added (GVA) impact of the legacy period is estimated to be Dh62.2bn (US$16.9bn).
The report says that more than 80% of the expo site is going to be used to create District 2020, which aims in the long term to become a new city covering more than four million square metres.
Dubai will play host to many more visitors during the expo than it would normally and what happens to the hotels and architecture constructed for world fairs like Expo 2020 continues to be contentious.
James says: “Well exactly, and that is the 2008-09 scenario, when the global economic downturn meant that there was a massive overcapacity in Dubai and so the challenge for every single event like this, the challenge is what do we do after? Obviously, there are things you can do to make it attractive – you can offer discounted rates and step up your tourist attractions, but a lot comes down to the global economy.”
While the report says infrastructure will likely be retained post-event, Dubai could face problems with overcapacity, particularly as its neighbouring country Saudi Arabia is trying to increase domestic tourism, diverting people to the Arab country who might otherwise be going to Dubai – “that’s a longer-term challenge for Dubai”, James says. Saudi Arabia has implemented a range of social and economic reforms since Crown Prince Mohammed bin Salman was appointed de facto leader in June 2017, to boost its economy through tourism and diversify its offerings away from oil – which currently accounts for 70% of its export earnings.