Seasonal tourism and new projects expected to drive demand starting first quarter of 2019
A majority of businesses in Dubai foresee accelerated economic growth in the first quarter of 2019, according to a quarterly survey conducted by the Department of Economic Development.
The survey, conducted in Q4 2018, shows that 59 percent of companies are optimistic about growth in Q1 2019, compared to 41 percent for the same period in 2018.
Another 34 percent expect stability, while the percentage of firms expecting declines decreased from 8 percent to 7 percent.
According to the DED, the high level of optimism is driven by public spending on infrastructure and social developments, initiatives to increase the ease of doing business and a brighter outlook on sales and profits.
Large companies and the manufacturing sector as a whole were found to foresee seasonal tourist football, while various projects related to Expo 2020 and Dubai Plan 2021 are expected to drive demand.
The last quarter of 2018 saw the composite Business Confidence Index (BCI) increase year-on-year and quarter-on-quarter, driven by expectations of increased new purchase orders, volumes, revenues and profits.
Projections for revenues also showed increased, with the net balance going up from 26 percent for Q1 2018 and 42 percent for Q4 2018 to 52 percent for Q1 2019.
Meanwhile, the net balance for volumes increased to 47 percent for Q1 2019, up from 22 percent from Q1 2018 and 34 percent for Q4 2018.
Companies anticipating increases in volumes constituted 58 percent, compared to 31 percent who expected no change.
The manufacturing sector was found to be the most confident in terms of revenues, volumes hiring, profits and new purchase orders.
The services sector was found to be the most optimistic about selling prices, with the hospitality segment the most optimistic about higher volumes for Q1 2019, with a net balance of 70 percent based on higher seasonal demand and new customers.
Competition remained the primary challenge for Dubai firms, as cited by 46 percent of respondents. This was followed by delay in payments and receivables (34 percent) and demand and market conditions (26 percent).
However, 11 percent of firms said that they do not expect any negative factors to hinder their business operations.