Dubai Economy Tracker Index Hits Second Lowest Reading in Over Two Years

Published January 16th, 2019 - 08:07 GMT
The key monitored sectors - construction, wholesale & retail and travel & tourism - registered slower improvements in business conditions in December. (Shutterstock)
The key monitored sectors - construction, wholesale & retail and travel & tourism - registered slower improvements in business conditions in December. (Shutterstock)

Non-oil private sector growth in Dubai eased in December as the three main sectors expanded at a slower pace compared to November, Emirates NBD said on Tuesday.

Dubai's largest bank said in a report that although total activity continued to rise at a strong overall pace, new business increased at the second-slowest rate in over two years and employment remained broadly unchanged. "Inflationary pressures remained weak as input costs rose modestly and firms continued to cut their charges."

The bank's Dubai Economy Tracker Index fell from November's 55.3 to 53.7 in December - the second-lowest reading in over two years and below the historic average (since 2010) of 55.2.

The report said this signalled relatively muted non-oil growth. Moreover, the average for the fourth quarter of 2018 (53.8) was the lowest of any quarter since first quarter 2016.

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Khatija Haque, head of Mena Research at Emirates NBD, said all three of the individual sectors tracked in the index expanded at a slower pace in December as compared to November, with the construction sector slowing from the particularly strong 57.5 seen last month to 53.7 in the latest print. Travel & tourism remained the underperformer, falling from 52.8 to 52.0, compared to wholesale & retail trade's 54.2. "Output in the whole of Dubai survey remained solidly expansionary, with over a quarter of respondents seeing greater activity, while nearly a third of firms saw greater new orders, in a positive for future output. The majority also expected future conditions to improve, with only 5.3 per cent expecting a deterioration over the next 12 months," said Haque.

All three of the key monitored sectors - construction, wholesale & retail and travel & tourism - registered slower improvements in business conditions in December. Travel & tourism continued to post the weakest overall growth (52.0), followed by construction (53.7) and wholesale & retail (54.2).

Haque said the squeeze on firms' margins was less than seen in November as input costs grew at the slowest pace since August, while price discounting also slowed. Only 6.4 per cent of firms reported price cutting, compared to 16.9 per cent the previous month. Nevertheless, headcount remained flat, with less than one per cent reporting increased employment.

"December's index reading takes the 2018 average to 55.0 - moderately weaker than the 56.0 averaged in 2017 but nevertheless a more robust reading than seen in 2015 and 2016. Our real GDP growth estimate for 2018 is 2.8 per cent, in line with that recorded in 2017," she said.


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