DUBAI / WAM
New export markets and projects being launched ahead of Expo 2020 Dubai are energising economic activity in Dubai, particularly in the trading and construction sectors and businesses are confident of improved outcomes in the months ahead.
The quarterly survey of the Dubai Economy shows Composite Business Confidence Index (BCI), in the emirate improving by 2.2 points to reach 114.9 in the second quarter of 2019, compared to 112.7 points in the same period of 2018, with respondents anticipating higher volumes and profits.
The survey also showed that 83 percent of the businesses in Dubai rated their situation as “good” or “stable” in Q2 of 2018, while the others had to deal with a few obstacles, such as weak demand during the Ramadan season and increasing competition. The proportion of businesses foreseeing an improvement in the business situation has slightly increased from 45 percent in Q3 of 2018 to 46 percent in Q3 of 2019, while 43 percent expect stability to prevail.
Large companies continue to maintain stronger projections as compared to SMEs with Composite BCI scores of 118.3 and 109.9 points for Q3 of 2019, respectively. As Dubai successfully promotes itself as a competitive source market, 22 percent of the firms look to exporting to new markets during Q3 of 2019. The leading new markets for export diversification are Africa and Europe.
Commenting on the latest BCI scores, Khalid Al Kassim, Assistant Director-General for Economic Affairs at the Dubai Economy, said businesses in the emirate are being innovative and seizing opportunities in spite of a challenging global economic landscape. “Businesses in Dubai have been able to remain competitive and aim for the next level as a series of measures adopted by the government continue to enhance the ease of business and create new economic opportunities.”
A comparison of expectations among key economic sectors reveals that the trading sector holds the strongest outlook for sales revenue, volumes sold, profits, hiring and new purchase orders as compared to the manufacturing and services sectors for Q3 of 2019. Overall, 50 percent of businesses are looking forward to their revenues improving in Q3 of 2019, chiefly on higher volumes, while 33 percent estimated stable revenues.
For the upcoming quarter, while 79 percent of respondents intend to maintain their selling prices at the current level, 10 percent plan to increase prices.
The trading sector is most confident about its prospects on sales volumes, selling prices, revenue, profits, hiring and new purchase orders as compared to the manufacturing and services sectors.
Within services, the construction segment is the most optimistic about volumes for Q3 of 2019, while in the trading sector, the auto (spare parts) segment is most optimistic about volumes during Q3 of 2019.
In the coming 12 months, 30 percent of the firms intend to expand their current headquarters. Manufacturing firms are most optimistic about capacity expansion plans as compared to the services and trading firms.