The gloom surrounding the UAE’s small businesses failed to lift in the final quarter of last year, according to a sentiment survey released on Tuesday by Gulf Finance.
From confidence to payment collections, and from hiring to financing, the country’s SME sector reported a decline in sentiment in every sector covered by the survey.
The firm’s research showed that more than half (51 percent) had seen stagnation or decline in total orders compared to 28 percent in the previous quarter. Thirty eight percent expected the trend to continue in the first quarter of this year.
The survey also showed that 35 percent of respondents believed that growth would be unchanged or negative, up from 19 percent in the third quarter.
The number of respondents who reported worsening payment collections almost doubled, rising to 29 percent from 15 percent in the third quarter. Similarly, the number of companies who said they found it tougher to raise financing almost tripled, to 36 percent from 13 percent in the previous quarter.
Half of the firms surveyed said they expected to either maintain the size of their workforce or reduce headcount over the course of the next three months, up from 32 percent in the third quarter. The figure shows a dramatic turnaround from the first quarter of 2015, where 84 percent said they were planning to hire more people.
However, the survey also showed that some optimism remained in the sector. Half of respondents said they were feeling slightly positive about the year ahead, while a quarter were neutral and only 12 percent were negative.
“The last quarter of 2015 witnessed a significant increase in negative sentiment sweeping the SME market. After a strong start to the year, UAE-based SMEs rapidly struggled to raise and collect money, pushing plans to recruit, launch products or open new outlets aside” said David Hunt, CEO of Gulf Finance, in a statement.
“As we’ve entered 2016 it is clear that the UAE’s SME market will continue to face similar challenges as seen in the second half of 2015. With a low oil price, slowing economic activity and lower levels of liquidity, SMEs are likely to continue to feel the impact on their business activities. Our Sentiment Survey notes a cautious optimism among small business owners which we hope will grow stronger during the course of the year.”
UAE banks with a large exposure to SMEs have been hurt by a rise in the past year in the number of so-called skips, people leaving the country with unpaid debt, a trend blamed in part on a strengthening US dollar, making it less competitive for many traders to export goods. The UAE dirham is pegged to the dollar.For all the latest business news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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