The UAE’s non-oil economy recorded a strong end to 2021, helped by Expo 2020 Dubai and the continued easing of travel restrictions.
According to the seasonally adjusted IHS Markit UAE Purchasing Managers’ Index (PMI), there was a “sharp expansion” of new business across the country, while output levels increased at the fastest pace in almost two-and-a-half years.
The index, a snapshot of the country’s non-oil private sector, posted 55.6 in December, well above the 50 that separates contraction from growth, but slightly down from the 55.9 reported in November.
David Owen, economist at IHS Markit, said: “The PMI remained close to its recent peak, at 55.6 in December, showing that the benefits to the economy from the Expo 2020 and the loosening of Covid-19 measures had remained strong throughout the final quarter of the year.”
Workforce numbers also rose, albeit marginally, reflecting a further recovery in employment after a long period of decline.
However, purchase price inflation jumped to a nine-month high, while input prices witnessed a sharp increase, largely as a result of a rise in fuel and energy costs as well as higher raw material prices.
And as the omicron Covid variant spreads throughout the country, region and wider world, business confidence fell to a three-month low in December amid fears of a tightening of business and travel restrictions.
Owen added: “The next few months may prove more challenging, however, depending on how the omicron variant impacts worldwide travel and local restrictions. Businesses also face the prospect of higher inflation, after the latest data indicated the fastest rise in purchase costs for nine months due to an increase in energy and raw material prices.”
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