Quarterly survey shows new projects and seasonal rise in demand behind improved outlook
Businesses in Dubai displayed a brighter outlook for the months ahead with stronger sales and revenues expected due to new projects and seasonal increase in tourist arrivals. The quarterly business survey of the Department of Economic Development (DED) also showed that more than 88% of the businesses foresee stronger or stable results throughout the rest of the year, as the government continues to roll out varied initiatives to accelerate economic growth and strengthen Dubai’s reputation as a business hub and investment destination.
Dubai’s dominant services sector, which continues to diversify and progressively improve efficiencies, is the most confident of the future, followed by manufacturing, another focus sector in the emirate’s strategic plan to grow into a global business hub and innovation centre. Overall, the Business Confidence Index (BCI) in Dubai moved up to 118.5 points during Q3 2018, from 112.7 points in Q2 2018, reflecting the positive sentiment prevailing among local businesses.
Projections for sales revenues for Q4 2018 are generally stronger compared to the third quarter with net balance up from 33% to 42%. The seasonal rise in demand has resulted in a stronger outlook for volumes; the net balance has increased from 29% for Q3 2018 to 34% for Q4 2018. Nearly half (46%) of the respondents anticipate higher volumes during Q4 2018, bolstered by higher demand, more customers and new projects while 42% expect stable conditions.
While the services sector is most confident about its business prospects across all parameters – revenues, pricing, volumes, hiring, profits and new purchase orders – the trading sector is the least optimistic and that too across all parameters in the survey.
The survey also reveals that domestic-market oriented firms hold stronger predictions than exporters for all parameters of the survey with BCI scores of 118.5 and 111.6 points, respectively. BCIs for SMEs and large companies is recorded at 111.0 and 123.5 points, respectively.
The proportion of firms that anticipate an improvement in the business environment stands at 52% for Q4 2018 (compared to 45% for Q3 2018) and 39% expect stable results in the final quarter. Further, 43% of the survey respondents do not anticipate any obstacles to their business operations during Q4 2018. The key challenges faced by Dubai’s businesses are competition and demand conditions.
Dubai’s strategy to grow into a major industrial and export hub appears to have accelerated efforts to bring in new talent into manufacturing. The manufacturing sector firms are more optimistic about their plans to expand capacity (66%), versus 65% of services firms and 60% of trading companies in Q3 2018. On the other hand, services firms are more optimistic about technology upgrade plans (69%), as compared to manufacturing (65%) and trading firms (59%).