Strong local demand spurs UAE non-oil growth in Nov
DUBAI — Most of the expats when they land in the UAE dream of owning a big house, a car and a business that can support them for the rest of their lives in their home countries. Many of them — with an average middle class income — opt for loans which they remit to meet their financial objectives.
Out of over eight million expats in the UAE, there are approximately 2.8 million Non-Resident Indians (NRIs) , accounting for the largest expat community in the country. NRIs remitted Dh14.64 billion, or around 35.9 per cent of the total value of the UAE remittances, during the second quarter of the year which saw total remittances reaching Dh40.8 billion.
Apart from the easy availability of loans in the UAE, one of the key advantages is that the interest dubai — The UAE’s non-oil sector witnessed a strong growth on the back of new orders from local companies.
The Emirates NBD Purchasing Managers’ Index (PMI) for the UAE rose to 57.0 in November from 55.9 in October, signalling a faster rate of growth in the non-oil private sector last month.
The PMI reading was the highest since August, and the second highest reading this year.
Output and new orders rose at a faster rate last month, despite an outright decline in new export orders. “This suggests that the driver of growth is domestic demand. The November survey confirms our view that the UAE’s non-oil sector will likely see strong growth in the fourth quarter of this year, as both households and business boost purchases before VAT comes into effect at the start of next year,” said Khatija Haque, head of Mena Research at Emirates NBD.
However, job growth remains soft (the index slipped to 50.9 in November; a five-month low) and there is also little evidence of wage growth, she said.
The muted employment and wage data suggests that any boost rates in the UAE are lower than those offered by banks in India. Considering the impact of multiple factors — including currency fluctuation — the question that arises is that how beneficial it is for the NRIs to opt for loan in the UAE and invest in India. Despite low-cost and easier borrowing in the UAE as compared to India, analysts are of the view that it’s easier said than done.
The overall level of business optimism remained high in November.
to household consumption this quarter will likely prove temporary. Input cost inflation accelerated in November, on the back of higher purchase costs.
However, firms were unable to pass on these higher costs, with average selling prices declining (albeit modestly) once again in November. Purchasing activity and accumulation of pre-production inventories has been sharply higher year-to-date compared with last year.
While some of this might be attributed to pre-VAT stockpiling, survey respondents indicated they had boosted inventories ahead of an expected upturn in sales. The overall level of business optimism remained high in November, although the index slipped slightly from October to 59.2. Firms cited projects related to Expo 2020 as one reason for their optimism about the coming year.
— waheedabbas@khaleejtimes.com
chief market analyst at Century Financial