60% of Dubai firms optimistic about business conditions in 2020
Dubai Economy says more companies expect increase in commercial activity due to Expo 2020
Dubai skyline contains its fair share of architectural novelties and distinctive silhouettes. Dubai Media office twitter account.
By Cleofe Maceda, ZAWYA
More and more companies are expecting better business conditions in Dubai in the first three months of 2020.
According to a survey by the Dubai Economy, the proportion of companies anticipating better business conditions in the first three months of 2020 increased to 60 percent, from 58 percent in the last quarter.
“Improving domestic market conditions and strong prospects for international reach have seen businesses in Dubai welcoming 2020 with optimism,” the Dubai Economy said in a statement on Tuesday.
Entrepreneurs in Dubai were less upbeat last year, particularly in the third quarter, when 19 percent of businesses rated their performance as below par amid a slowdown in consumer spending and commercial activity.
Uncertainty over the US-China trade war also weighed down local business sentiments. “Softer demand, lower margins and less projects have had an impact in the last quarter of 2019,” the Dubai Economy said.
The latest UAE Purchasing Managers’ Index (PMI) by IHS Markit, which tracks business activity, showed that conditions in the non-oil private sector last month deteriorated for the first time in 10 years. As a result, job numbers fell significantly.
“[The indicator for jobs in the index] was at one of its lowest levels seen in the survey… The rate of [employment] decline was one of the quickest recorded,” David Owens, an economist at HIS Markit, told Zawya.
Despite the prevailing conditions, companies in Dubai are counting on Expo 2020 to unlock business opportunities.
About 56 percent of those polled by the Dubai Economy said they expect a rise in commercial activity as a result of the Expo, while 20 percent expect improvement in business or market conditions.
A smaller number of firms (14 percent) expect “visitor activity” to increase, while 7 percent bank on more construction activity.
“Initiatives to reinforce Dubai as a gateway and enhance ease of doing business have had a significant impact on overall economic activity in the emirate and particularly on trade and tourism,” said Ali Ibrahim, deputy director-general of Dubai Economy.
Expectations, plans ahead
As for their plans this year, the majority of companies (63 percent) said they intend to keep their prices unchanged, although 29 percent said they will consider increasing their rates, as they expect market and business conditions to improve.
Firms in the manufacturing sector are more confident about their business prospects, including areas around salaries, sales revenues, volumes, profits and hiring compared to their peers in the services and trading industries.
Within the manufacturing sector, businesses in the metals segment are the most optimistic about increasing volumes. The same is true for the food and beverages and textile segments in the trading sector.
For companies operating in the services sector, the most optimistic about higher volumes are hotels, and restaurants, travel and car rental companies.
The UAE economy was earlier forecast to register a 2 percent real growth in 2019, up from 1.7 percent in 2018. Analysts have said that that economies in the Gulf Cooperation Council (GCC) region are likely to feel the rippling effects of the coronavirus, which has already impacted global oil demand.
(Reporting by Cleofe Maceda; editing by Seban Scaria)
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