DUBAI - With the highest tower in the world, grand commercial centres and artificial islands, Dubai projects an image of prosperity, even as the city-state races to court investors to bolster a flagging economy.
Despite boasting the most diverse economy in the Gulf region, the emirate's vital property, tourism and trade sectors have weakened in recent years.
Real estate deals plunged 21.5 percent to $60.7 billion in 2018, according to government data, while the number of tourists visiting Dubai remained stagnant at around 16 million in the past two years.
"Dubai's economic growth has been lacklustre... following a weak real estate market and subdued consumer spending," M.R. Raghu, head of research at Kuwait Financial Centre (Markaz), said.
The emirate's economy grew by just 1.94 percent last year -- almost half of its 2017 growth and just a notch above the 1.9 percent in 2010, when Dubai was still recovering from a recession due to the global financial crisis and its own debt problems.
But Raed Safadi, chief economic advisor to Dubai Economy, the government agency responsible for promoting development, downplayed reports about the slowdown.
"We are still growing. Yes, it is not at 4.5 percent -- the average between 2012 and 2016 -- but given all the conditions around the world, it is healthy," Safadi said.
He expects growth to pick up to 2.1 percent in 2019 and rebound to as high as 3.8 percent next year.
This prediction relies heavily on the Expo 2020 global trade fair that Dubai hopes will deliver an economic windfall and some 300,000 new jobs.
Safadi said Expo 2020 is expected to add some $35 billion to the economy over the subsequent decade.
But with the region's most open market, Dubai is exposed to global trade tensions, regional slowdown and the economic downturn in Iran under tough US sanctions, according to the London-based Capital Economics.
"All of this will weigh on Dubai's key logistics, tourism and manufacturing sectors," said James Swanston, an economist at Capital Economics.
To preserve Dubai's image as an economic hub, the city-state has implemented a raft of incentives.
Months ago, the government started granting permanent residencies to big investors and allowed foreigners to have full ownership of businesses throughout the emirate, including outside free zones.
Authorities also began offering long-term visas for foreign investors, students and talent, while revising fees on hundreds of services, freezing school fees and setting up a high-level committee to rebalance the property market.
With a population of 3.3 million -- over 90 percent of them expats -- Dubai draws 70 percent of its revenue from fees on various transactions and around 24 percent from taxes and government company profits.
Just six percent of its revenue comes from oil.
Fahad al-Gergawi, CEO of Dubai Foreign Direct Investment, a public body, said reports of the downturn were exaggerated.
"The economic slowdown is not new to Dubai... but certain media reports highlight particular issues to show that Dubai is struggling," he said on the sidelines of Dubai Investment Week held last week.
"We have passed through similar economic cycles in the past."
Gergawi said Dubai has been among the top 10 cities in the world for attracting new investment in the past five years and among the top three cities for Foreign Direct Investment.
The government announced on Sunday that in the first half of 2019, the emirate received $12.7 billion in FDI, an increase of 135 percent from the same period last year, surpassing even the $10.5 billion it received in 2018.
"In the medium term, spending related to hosting Dubai Expo 2020 and monetary easing measures would support growth. Furthermore, Dubai has been actively undertaking reform measures to boost the economy," Raghu said.
But Dubai, one of seven Sheikhdoms that make up the United Arab Emirates, still faces high public debt of around $123 billion, or 110 percent of GDP, divided almost equally between the government and state-linked companies.
About two-thirds of the debt of state-linked companies will mature by the end of 2023.
But Swanston said a "total debt default" is unlikely as oil-rich Abu Dhabi, the wealthiest emirate in the federation, "would come to the rescue" as it did when Dubai defaulted on its debt in 2009.