Dubai's Q1 business confidence soars, says gov't unit

Rising confidence on sales and profits is reported in most economic activities in Dubai for the first quarter of 2012, according to the latest business confidence survey conducted by the Department of Economic Development (DED).

The Business Confidence Index (BCI) in the emirate rose by 16 percent to more than 133 points in the final quarter of 2011 compared to the previous quarter.

A total of 500 companies in Dubai, including SMEs, were covered in the last quarterly survey of 2011 conducted between October and December.

Over 67 percent of respondents said they expected an improvement in their sales in the first quarter of 2012, which is a 10 percentage points increase compared to Q4 of 2011.

While 39 percent of companies said their profits are likely to remain stable, 44 percent saw Q1 2012 bringing higher profits, the index showed.

The retail sector said it expected higher sales in Q1, boosted by the Dubai Shopping Festival (DSF) which runs until February 5.

Transportation and logistics companies also said they expect business to improve, largely on the back of higher cargo movements in order to respond to DSF demand.

With new projects set to start rolling in the UAE and contracts expected from other GCC countries, the construction sector foresees stability and in some cases marginal increase in sales revenues.

Nearly 30 percent of companies surveyed said they will increase the size of their workforce, as against 19 percent in Q3, with manufacturing and service firms expressing the strongest interest in hiring.

"Overall, a progressive build-up of dynamism and confidence is visible across key sectors. The year 2012 will by all means energise growth in Dubai," said Sami Al Qamzi, director-general of DED.

Companies were asked to indicate if they anticipated an increase, decrease, or no change in key indicators such as sales revenues, selling prices, volumes sold, profits and number of employees.

The survey also pointed to still insufficient demand for products and services, stiff competition, rising operating costs and fees, frequent changes in business regulations and delays in payments as the major challenges to local business operations.