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Sun 25 Oct 2015 12:58 PM

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Slowdown in orders hitting small businesses in UAE

SMEs report deceleration in market in latest sentiment survey from Gulf Finance.

Slowdown in orders hitting small businesses in UAE

Small and medium-sized businesses in the UAE have reported concerns over payment collection, a decline in orders and negative sales growth in the third quarter, according to a survey published today.

Gulf Finance’s Q3 SME Sentiment Survey showed signs of “a deceleration in the UAE’s SME market” with respondents to the survey “slowly turning more negative as economic growth continues to soften”.

In each of the six topics covered by the survey, respondents were more negative about their prospects than they had been in the previous quarter.

The survey showed a weakening in orders for the first time, with 7 percent of respondents saying orders had decreased or significantly decreased in the third quarter, compared to 0 percent for the second quarter. Similarly, the number of respondents who reported an increase in orders dropped to 71 percent from 80 percent in the second quarter.

The survey also showed that only 55 percent of respondents state their payment collection ability remained strong during the third quarter, compared to 72 percent in the previous quarter. Fifteen percent said the deterioration in payment collections had increased significantly, compared to just 2 percent in the second quarter.

Thirteen percent of respondents said they had more difficulty raising finance, compared to 0 percent in the third quarter.

Hiring plans have also been affected, with 4 percent reporting a reduction in staff in the third quarter (0 percent in the second quarter). Two thirds of companies, however, said that they had expanded their teams, although that was down from 72 percent in the second quarter.

Looking ahead, 78 percent of respondents forecast an increase in sales in the fourth quarter, compared to 91 percent in the previous survey. Nineteen percent said that they expected growth to remain flat, while 3 percent projected a decline in the final quarter.

“Although growth opportunities for SMEs still preside, the less bullish and increasingly pessimistic sentiment in the market is evidence that the effects of a slowing pace of economic growth are beginning to impact SME performance. A number of factors could reverse this trend and we will be monitoring developments closely until the end of the year,” David Hunt, the CEO of Gulf Finance, said in a statement.