Construction, trading grow as Expo 2020 Dubai boosts economy
Dubai Economy's quarterly index reveals local firms expect market improvement despite small dip in hiring sentiment
The construction and trading sectors are among the notable beneficiaries of new export markets and projects that are driving Dubai's economic growth ahead of Expo 2020 Dubai, with Dubai Economy's quarterly Composite Business Confidence Index (BCI) showing Dubai companies – especially those in the trading sector – are optimistic about expansion, improved sales, and revenue growth despite a quarterly slowdown in hiring intentions and some firms facing challenges related to reduced demand during Ramadan and increasing competition.
The construction segment is the most optimistic about volumes for Q3 2019, with a net balance of 41% on account of new project launches and expected improvement in market conditions, BCI found.
Forty-six percent of all surveyed firms expect an improvement in business conditions in Q3 2019, and 43% expect stability to prevail, with 50% of the businesses expecting increased revenues during Q3 2019, and another 33% expecting revenue stability.
Overall, the BCI showed an improvement of 2.2 points to hit 114.9 points in Q2 2019, with 83% of Dubai businesses rating their situation as 'good' or 'stable' during the quarter.
The trading sector holds the strongest outlook for sales revenue, volumes sold, profits, hiring, and new purchase orders in Q3 2019, followed by the manufacturing and services sectors.
Hiring intentions have softened on a quarterly basis with the net balance decreasing from 13% for Q2 2019 to 12% for Q3.
Projections for volumes has displayed a year-on-year increase as well, with the net balance rising from 29% in Q3 2018 to 31% in Q3 2019, driven primarily by Expo 2020 Dubai-led optimism, in addition to expectations of new customers and projects, and better market conditions.
For the upcoming quarter, 79% of Dubai Economy's BCI respondents plan to maintain their selling prices at the current level, and 10% intend to raise prices.
Dubai Economy's BCI found that 22% of its surveyed businesses were eyeing new export markets in Q3 2019, with the majority seeking diversification in Africa and Europe.
In the coming 12 months, 30% of the firms surveyed by Dubai Economy intend to expand their current headquarters, with manufacturing firms most optimistic about capacity expansion plans as compared to services and trading firms, according to a report by UAE state news agency, Wam.
Commenting on the findings, assistant director general of Dubai Economy's economic affairs department, Khalid Al Kassim, said: "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 ease of business and create new economic opportunities."