Business activity in Dubai’s non-oil private sector economy remained strong in December in anticipation of increased investments on the back of Expo 2020 and higher sales this year, despite a slight fall in month-on-month growth.
The seasonally adjusted IHS Markit Dubai Purchasing Managers’ Index fell to a four-month low of 52.3 in December, from 53.5 in November as the rate of growth in orders dipped. The latest reading indicated a modest improvement in business conditions in the Dubai non-oil economy. A reading above 50 indicates economic expansion.
“The Dubai non-oil economy showed further signs of weakness at the end of 2019, with new order growth the slowest in nearly four years. Nevertheless, business activity continued to expand sharply, mainly because firms expect things to pick up in the year ahead,” said David Owen, an economist at IHS Markit, which compiles the index.
“The Expo 2020 is a key feature of firms’ hopes for the future, as it promises to bring a timely boost to investment and spending across Dubai.”
Firms surveyed noted that softer economic conditions reduced clients’ spending power, possibly contributing to a weaker increase in new orders in December. But business activity continued to rise at a stronger pace, with the rate of increase rising compared with November.
Companies also raised purchasing activity at the sharpest rate in four months as they sought to grow inventory levels, the index showed.
Employment in Dubai’s non-oil economy increased for the fourth month in succession in December, though the rise in job numbers was only marginal.
While the level of positive sentiment for output in 12 months’ time fell for the first time in December, the majority of respondents surveyed said they expect business activity to pick up as the economy benefits from increased local investment in the year ahead.
Meanwhile, the Business Registration and Licensing arm of the Government of Dubai’s Department of Economic Development said on Sunday that 38,377 new business licences were issued last year, a 90 per cent year-on-year increase. The number of licences cancelled dropped by 1.7 per cent to 4,949.
The department said the Foreign Direct Investment law introduced last year contributed to an increase in the number of investors, which led to more companies setting up in the emirate.
A report by consultancy EY last year revealed that Expo 2020 will have contributed about Dh122.6 billion in value to the UAE’s economy by 2031. At its peak, the impact of the mega-event will be equivalent to 1.5 per cent of the country’s GDP. Expo 2020 will open in Dubai on October 20, 2020 and will last for 173 days.
Updated: January 12, 2020 03:06 PM