(MENAFN - Khaleej Times) Optimism on Dubai's growth prospects during the first quarter recorded an upswing with majority of businesses foreseeing faster pace of economic development, results of a survey released on Sunday show.
The quarterly survey conducted by the Department of Economic Development (DED) shows that 59 per cent of companies in the emirate are optimistic about economic growth in 2019 first quarter, compared to 41 per cent for the same period of 2018. While 34 per cent expect stability, those expecting any decline in growth decreased from eight per cent to seven per cent.
"Sustained public spending on infrastructure and social development, initiatives to increase of ease of business, and a brighter outlook on sales and profits have all contributed to businesses in Dubai welcoming the New Year with improved confidence," DED said in a statement.
Large companies and the manufacturing sector as a whole foresee seasonal tourist footfall and the Expo 2020 as well as varied projects aimed to accelerate innovation, industry and exports as part of the Dubai Plan 2021, driving demand during first quarter, the survey report said.
Most of the recent economic and business indicators underscore this upbeat outlook for the UAE in general. According to the International Monetary Fund, the UAE economy will accelerate to 3.7 per cent in 2019, from 2.9 per cent in 2018, as it starts to recover from the slowdown caused by the oil-price slump. Higher oil prices and Opec's decision to raise output had been a boost for the oil sector, while non-oil growth is estimated to rise to 3.9 percent this year and 4.2 percent in 2020, the IMF said at the end of a country consultation.
The UAE will be the fastest growing economy in the GCC region this year along with Oman, driven by non-oil sector, Dh50 billion Abu Dhabi stimulus package and projects linked to Expo 2020 Dubai, according to the Institute of International Finance (IIF). The IIF analysts projected the UAE's real GDP to grow 3.1 per cent in 2019 compared to 2.9 per cent estimated for 2018. Large companies in Dubai maintain stronger projections for first quarter, 2019 as compared to SMEs with Composite BCI scores of 131.2 and 118.8 points, respectively. Large companies have highlighted a more optimistic forecast than SMEs for most parameters.
"Competition remains the primary challenge for Dubai firms, as cited by 46 per cent of the respondents, followed by delay in payments/receivables (34 per cent) and demand/market conditions (26 per cent). However, 11 per cent do not expect any negative factors to hinder their business operations," DED report said. The report said the final quarter of 2018 saw the Composite Business Confidence Index (BCI) improving year-on-year and quarter-to-quarter driven by expectations of improved returns across all parameters - new purchase orders, volumes, revenues, and profits.
Projections for revenues shows a year-on-year and quarter-on-quarter increase, with the net balance increasing from 26 per cent for first quarter 2018 and 42 per cent for fourth quarter 2018 to 52 per cent for first quarter 2019.
The manufacturing sector is most confident across the following parameters: revenues, volumes, hiring, profits and new purchase orders. Technology upgrades are in the pipeline for 42 per cent of the manufacturing firms, as compared to 35 per cent of services firms and 27 per cent trading firms.
The services sector is most optimistic about selling prices and within the sector, the hospitality segment which includes services related to travel and car rentals, is most optimistic about higher volumes. In the trading sector, the computers and electronics segment is most optimistic about volumes during first quarter 2019. -
Issac John Associate Business Editor of Khaleej Times, is a well-connected Indian journalist and an economic and financial commentator. He has been in the UAE's mainstream journalism for 35 years, including 23 years with Khaleej Times. A post-graduate in English and graduate in economics, he has won over two dozen awards. Acclaimed for his authentic and insightful analysis of global and regional businesses and economic trends, he is respected for his astute understanding of the local business scene.