By Sam Bridge
Businesses in Dubai are confident of closing the year on improved revenues and a stronger footing - survey
Businesses in Dubai are confident of closing the year on improved revenues and a stronger footing with economic growth expected to gain momentum during the months ahead, according to a new survey.
The quarterly business survey of Dubai Economy showed that the Composite Business Confidence Index (BCI) of local businesses increased 14.9 points and reached 129.8 points in the third quarter of 2019 from 114.9 points in the second quarter.
The BCI for Q3 has also gone up 11.3 points to 129.8 from 118.5 in the same quarter of the previous year, reflecting an improvement in the business environment and future outlook.
On an annual basis, businesses said they are more upbeat about hiring, sales revenue and volumes due to an expected improvement in business conditions, new projects, increased marketing activity, and optimism surrounding the upcoming Expo 2020.
Ali Ibrahim, deputy director general, Dubai Economy, said the latest survey points to optimism among businesses across all sectors.
“Looking ahead, we see the momentum building up, notably with the countdown to Expo 2020 Dubai, which will further strengthen investor confidence in Dubai,” he said.
More than 55 percent of firms in both services and manufacturing sectors expect an increase in volumes in the coming quarter and a stronger forecast for volumes has resulted in a more optimistic outlook for profits.
Large companies continue to maintain stronger projections as compared to SMEs with BCI scores of 135.6 and 121.1 points, respectively. Large companies are also more optimistic than SMEs about their outlook for selling prices, volumes, hiring, profits, and new purchase orders.
The services sector is more confident about its business prospects for parameters like wage levels, sales revenue, volumes, profits, and hiring compared to manufacturing and trading sectors, with the travel and hospitality sector being the most optimistic about volumes for Q4.
The BCI for exporters also displayed a year-on-year and quarter-on-quarter increase of 7.2 points and 2.9 points to 118.8 in Q3 compared to 111.6 in Q3 2018 and 115.9 in Q2 2019, respectively.
According to the survey, delays in payments remains the primary challenge, as cited by 43 percent of firms, followed by competition (34 percent) and insufficient demand (17 percent) while 13 percent of firms said they did not face any hurdles in their business operations.
Hiring intentions have also improved on a year-on-year and quarter-on-quarter basis, with net balance increasing from 7 percent for Q4 2018 to 14 percent for Q4 2019. The increase is mainly attributable to the expected rise in hiring in manufacturing and services sectors.