Improving demand bolsters business confidence in Dubai

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CORONAVIRUS IMPACT

Stronger performance expected to extend through to the last quarter of 2015

Businesses in Dubai are buoyant on the improving demand during the winter months and the positive sentiment is largely expected to firm up further during the last three months of 2015, according to the quarterly business survey conducted by the Department of Economic Development (DED) in Dubai.

The Business Confidence Index (BCI) for the third quarter of 2015 showed an increase from 110.1 points in the second quarter to 124.8 points though the composite BCI is 15.8 points lower compared to Q3 2014.

Performance estimates driven by the cyclical upswing in demand has led to 51% of the businesses anticipating further improvement in Q4 2015 with only 8% gearing for a slump, as against a corresponding 43% and 16%, respectively, in the previous quarter. The remaining 41 per cent expect the situation to remain unchanged during Q4 2015.

Sales revenue expectations in Q3 2015 are stronger than in Q2 2015 though moderate when compared to the last year. The net balance for sales revenues for Q4 2015 stands at 49% in comparison to 29% for Q3 2015 and 62% for Q4 2014.

In a reversal of trend from the last quarter, large companies are more optimistic compared to SMEs, with composite BCI scores of 129.2 and 118.3 points respectively. However, while larger firms are more optimistic about selling prices, number of employees and net profits, SMEs hold a stronger outlook with respect to volumes sold.

Exporters have a weaker outlook compared to the overall business community, with composite BCI scores of 111.3 and 124.8 points, respectively. Domestically-oriented firms are more optimistic than exporters in term of sales revenues, selling prices, volumes, net profits, hiring and new purchase orders.

A large proportion (79%) of businesses have indicated that they do not foresee any change in their selling prices during Q4 2015, while 13% of the businesses are hopeful of higher selling prices However, growing competition has led 8% of the respondents to forecast a dip in selling prices during Q4, 2015. For Q4 2015, the net balance for selling prices stands at positive 5%, which is higher compared to positive 3% in Q3 2015.

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