Strong growth in Dubai’s non-oil sector
Sharp expansion of output and new orders, increase in business activity and rise in employment witnessed, with wholesale and retail sectors leading charge.
dubai — Led by wholesale, retail, travel and tourism and construction sectors, Dubai’s non-oil sector witnessed strong growth momentum continuing in July.
According to the Emirates NBD Dubai Economy Tracker Index released on Wednesday, there was a sharp expansion of output and new orders, increase in business activity and marginal rise in employment during the month.
The positive overall trend for business conditions was supported by a sharp increase in output, despite growth easing to a slightly slower pace. The rise in business activity was attributed to favourable economic conditions and more projects.
The survey results showed the wholesale and retail industry was once again the best-performing sectors, followed by travel and tourism and the construction sector with the index at 57.9, 56.3 and 54.8 respectively.
Khatija Haque, head of Mena research at Emirates NBD, said: “While the headline index continues to reflect strong growth in the non-oil economy in July, firms’ margins continue to be squeezed as they lower selling prices, particularly in the trade and hospitality sectors. Employment growth remains soft overall.”
The oil sector now makes up less than one per cent of Dubai’s gross domestic product.
A press statement said the broader Economy Tracker Index stood at 56.3 in July, broadly similar to 56.5 in June. A reading of below 50.0 indicates that the non-oil private sector economy is generally declining; above 50.0, that it is generally expanding. A reading of 50.0 signals no change.
Sheikh Ahmed bin Saeed Al Maktoum, Second Deputy Chairman of the Executive Council, said last month that Dubai has outperformed global economic growth.
He said the emirate’s economy is poised to expand further over the next two years, driven by major investments as well as growth in tourism, real estate and manufacturing sectors.
Real economic growth
Sami Al Qamzi, director-general of Dubai Economy, also predicted in a report last month that the emirate’s real economic growth is expected to reach 3.1 per cent in 2017 and 3.6 per cent in 2018.
The survey revealed incoming new businesses expanded at the fastest pace since April as the rate of increase was stronger than the long-run series trend. According to anecdotal evidence, client wins were supplemented by promotional activities and stronger underlying demand conditions.
Overall business confidence increased from June’s 10-month low, but remained weaker than the overall level of positive sentiment recorded on average in the series history. Optimism was firmly rooted in expectations of further improvements in demand, supported by promotional activities. The survey revealed that despite higher costs, firms reduced output charges for the second month in succession. The rate of discounts offered slowed to a fractional pace. Price discounting was associated with efforts to stimulate demand amid intense competitive conditions.
The reductions in output charges in the travel and tourism and wholesale and retail sectors outweighed the increase seen in the construction sector.