Dubai's private sector 'upbeat' in build up to Expo 2020, says new Emirates NBD report
Private sector companies in Dubai signalled their “most upbeat” business outlook for 2017 since June 2015, driven by a rebound in construction activities in the run up to Expo 2020, according to Emirates NBD.
Earlier this month, the bank’s purchasing managers’ index said growth momentum in the UAE’s private sector non-oil activity gained traction in December 2016 on back of improving economic conditions.
Dubai’s 2017 budget has increased the emirate’s infrastructure spend by 27 percent with a government entity beginning the year with the launch of “Dubai Harbour”, a multi-billion-dollar tourism project.
Consultancy firm Deloitte has estimated projects worth $2 trillion are in the pipeline in the Gulf countries despite a 17 percent decline in the forecast of contract awarded last year. The “strongest” activity is forecast in Saudi Arabia and the UAE, it said.
“The degree of positive sentiment picked up to its highest since June 2015. Stronger business optimism was recorded across all three key sectors, led by travel and tourism,” the bank said.
Overall, the seasonally adjusted Dubai economy tracker index averaged 55.9 in December - the highest reading since July – and up from 55.2 in November, signalling marked month-on-month improvement.
Travel and tourism remained the best performing sub-category followed by wholesale and retail and as construction firms registered a “positive” shift in growth momentum at the end of 2016.
Job creation remained “marginal”, as all three key sectors recording “subdued” rates of employment growth. Construction companies saw the fastest rise in staffing levels, with job creation rallying to its strongest level since May, driven by “greater workloads and improving confidence regarding the business outlook”.
Khatija Haque, head of MENA Research at Emirates NBD, said the bank expected construction to be the “key driver” of growth in Dubai in 2017 as preparations for Expo 2020 move up a gear.
New work continued to expand at a sharp rate in December, with the rise termed as “one of the fastest since early-2015.”
The bank said “this reflected strong contributions from travel and tourism, wholesale and retail and an acceleration in construction sector new order growth which is the steepest since May”.