Dubai Chamber seminar highlights trader expectations for 2008

Dubai Chamber seminar highlights trader expectations for 2008

Dubai Chamber’s Economic Seminar 2008 reveals results of the surveys on the driving factors of inflation in the UAE and the businessmen’s take on corporate social responsibility

Dubai Chamber of Commerce & Industry yesterday (Monday) organised the Economic Seminar 2008 highlighting the traders’ expectations for 2008, the driving factors of Inflation in the UAE and the survey results of the State of Corporate Social Responsibility in 2007 in Dubai. The meeting was attended by HE Eng Hamad Buamim, Director General of Dubai Chamber, Dr Belaid Rettab, Director, Data Management and Business Research of the Chamber, and a number of the Chamber’s members, businessmen and the media.

The Seminar opened with the hot business topic of The Traders Expectations for 2008 which was based on a survey conducted earlier in the year and showed a positive outlook for 2008. In a scale of 1 to 10, with 10 representing the best expectation, average overall expectation for the trading sector for 2008 remains stable at 6.6 compared to 6.5 for last year.  However, the difference in the expectations between the large and the medium/small traders was significant. The survey also highlighted the sector’s response to the development of the emirate, with traders of machineries and industry inputs being more optimistic, registering higher-than-average expectation score.

The traders also expected the demand for goods to rise thus expecting better sales than last year. Majority expected demands and sales to go up, with traders of machinery and industry inputs being the most upbeat group. Demand and sales expectations were found to be correlated with employment size, with large firms significantly more upbeat. A change in the   outlook of traders for competitiveness has slowly evolved. 
 

Although price rise remained to be the main factor for competitiveness, the most recent survey showed significant increase in the number of traders considering competitiveness in product quality, after sale service and advertising while the limiting effect of traffic to transport of goods has been less reported for 2008, pessimism for property rentals and rising cost of goods continued to increase.

The results of the survey highlighted traders’ need for favourable trading regulations and improvement of facilities for trading efficiency, to counter the impact of rising costs of merchandise in the domestic and in the world markets. Since a significant part of Dubai traders’ activities are conducted in foreign markets, improving the business climate in the local market would not be sufficient as there is also a need to address the factors that affect traders’ competitiveness in foreign markets.
 
Meanwhile, another study by Dubai Chamber has found that world prices of imports, currency depreciation, rents, and money supply have been fuelling inflation in UAE economy. 

World commodity prices have been increasing during the last years and show no sign of easing as we head into the second quarter of 2008. The IMF world commodity price index has more than tripled between the beginning of 2000 and the start of the second quarter 2008. Prices for energy, metals and agricultural goods have all risen as demand for commodities has increased in a growing world economy. At the same time, supplies have remained relatively stagnant. The rising commodity prices increase the supply costs for businesses and this follows through to higher prices for consumers.

One channel through which UAE can import inflation is the rising world prices of imports which are also due to the currency depreciation, i.e. the exchange rate effect. The UAE currency, the dirham, is pegged to the US dollar in a fixed rate and the US dollar has been depreciating against the world major currencies. The study has shown that there is a clear pattern and upward trend of rent and inflation in UAE from the year 2000 and onwards. The correlation analysis has shown that there is a relatively high correlation between rent and inflation which is more pronounced in recent years. 

The relationship between money supply and inflation in UAE has been confirmed by the results of the correlation analysis. During the period 2001-2006, money supply grows by an annual average rate of about 19 per cent while real GDP grows by annual average rate of about seven per cent, which is indicative of inflationary pressures.

Another topic of discussion was the Center for Responsible Business (CRB) study which marked the second annual survey of attitudes and practices of corporate social responsibility (CSR) in Dubai in the summer of 2007 revealing that executives in Dubai consider CSR a fundamental part of their business agenda but they need to get more active on corporate social responsibility.

This was the common verdict coming out of the 2007 survey that followed the 2006 study on attitudes, commitments, and practices of small, medium, and large companies toward CSR. The majority of executives rated ensuring health and safety issues in the workplace and the care for environment as important issues. Likewise ethical practices in the supply chain, the marketplace, ensuring employees’ welfare, and donating to charity emerged as critical concerns.

The study also indicates that although  companies  in  Dubai  are  not  entirely  there  yet,  in  terms  of  mature  and integrated CSR strategies and practices, they have an excellent point of departure for getting there.