KHALEEJ TIMES, Monday, Jan 13, 2020 | Jamadi Al Awwal 18, 1441
Dubai's non-oil sector continues to expand
Business activity in Dubai's non-oil sector continued to expand in December 2019
on better growth prospects in 2020, according to the IHS Markit Dubai Purchasing
Manager Index survey released on Sunday.
"The Dubai non-oil economy showed further signs of weakness at the end of 2019,
with new order growth the slowest in nearly four years. Nevertheless, business
activity continued to expand sharply, mainly because firms expect things to pick
up in the year ahead. The Expo 2020 is a key feature of firms' hopes for the
future, as it promises to bring a timely boost to investment and spending across
Dubai," said David Owen, economist at IHS Markit.
Strong activity is the non-oil sector is attributed to companies' preparedness
for expected investment and higher sales in 2020.
Most of the studies conducted by regional and global think-tanks foresee higher
growth rates for Dubai and the UAE in 2020 compared to the previous year, due to
a strong influx of tourists and increased spending during the upcoming Expo
Also, the Dubai government announced an expansionary budget and higher
allocation for the Expo.
Looking ahead, around 64 per cent of respondents expect business activity to
grow, mainly amid hopes of market stabilisation and higher local investment as
Expo 2020 approaches. Tourism numbers are also forecast to strengthen in the
However, December saw Dubai's PMI falling to a four-month low of 52.3 from 53.5
in the previous month amidst the slowest rise in new orders for nearly four
years. Employment increased only marginally, but business activity remained
strong as firms prepared for expected investment and higher sales in the coming
Firms often highlighted that softer economic conditions reduced clients'
On a sector basis, output growth accelerated among construction and travel and
tourism firms. The other monitored sector, wholesale and retail, recorded the
weakest expansion in output since February 2016.
In response to softer demand growth, Dubai companies extended price discounting
strategies at the end of the year. Latest data signalled a solid fall in average
charges, albeit one that was the least marked since September. By contrast,
input costs increased for the second month running in December. The rate of
inflation quickened from November amid a renewed rise in staffing costs.