Dubai businesses upbeat on second quarter stability

Dubai - A majority of respondents in a survey expect no challenge in Q2

Businesses in Dubai are upbeat about stability as they do not expect any new challenges in second quarter following a strong first quarter performance across most sectors.
A quarterly business survey conducted by the Department of Economic Development (DED) in Dubai shows 47 per cent of the respondents expecting the situation to remain stable and 39 per cent looking forward to an improvement in the second quarter. Overall 83 per cent of the businesses do not expect any new challenges to their operations, compared to 55 per cent in fourth quarter 2015.
The survey, conducted to gauge the perceptions of the business community, is done in partnership with the leading global consultancy firm, Dun & Bradstreet (D&B).
The DED said the survey findings help detect the pulse of the business community whereby government authorities and the private sector can track and analyse major trends and issues concerning businesses in Dubai.
It shows that the first quarter saw strong performance across the manufacturing, services, transport and construction sectors helping the emirate offset the impact of the slowdown felt across regional markets.
The Composite Business Confidence Index (BCI) for first quarter 2016 stands at 116.5 points compared to 116.1 points in the previous quarter (Q4 2015) and larger firms appear more confident than SMEs, with BCI scores of 121.0 and 109.6, respectively.
The DED's survey results are in line the latest Emirates NBD Dubai Economy Tracker survey for March that shows a rebound by Dubai's private sector in business conditions after a slight deterioration in February. Travel and tourism was the strongest performing category of activity, followed by wholesale and retail and construction, Emirates NBD said.
The International Monetary Fund said on Monday that driven by Dubai's slightly higher economic growth rate, the gross domestic product expansion of the UAE will moderate to 2.4 per cent in 2016 despite headwinds posed by lower oil revenues, The Washington-based fund said that due to the diversified nature of Dubai's economy, the emirate is poised to record 3.7 per cent growth up from 3.6 per cent last year - far exceeding the average GCC growth forecast at 1.8 per cent for 2016.
The DED survey shows that expectations on sales revenues, selling prices and volumes are generally lower compared to fourth quarter 2015 but businesses are modestly more optimistic on their second quarter profits. The subdued forecast for selling prices (net balance of one per cent for second
quarter 2016) is also indicative of the low rate of inflation recorded in Dubai (monthly rate of 0.22 per cent in February 2016).
In sales volumes, 45 per cent of the companies anticipate an increase and 14 per cent forecast a decrease. While the manufacturing sector is more optimistic about volumes for second quarter 2016, the seasonal decline in economic activity during summer has had its impact on the services sector.
Among the three main sectors (industry, services and trade), the trading sector is the most optimistic on revenues and volumes. The manufacturing sector is the most upbeat on profits and the services sector, on selling prices and hiring. Within services, hotels and restaurants are cautious about sales volumes in second quarter while automobiles and electronics segments are the most optimistic within the trading sector.
The survey for Quarter 1 (January-March) of 2016 was done among 501 companies across Dubai. The participants  were asked to indicate if they anticipated an 'increase', 'decrease' or 'no change'  on key outlook indicators,  including sales revenues, selling prices, volumes sold, profits and number of employees.
The DED survey shows exporters are more confident in terms of volumes though not as optimistic on selling prices and hiring, compared to domestic-market oriented firms. Generally, exporters remain less optimistic than the overall business community does.
DED said the survey's scientific sampling approach ensured an adequate representation of small, medium and large enterprises and covered the Manufacturing, Trading and Services sectors. In addition, the sample also included export-oriented businesses in Dubai to capture perceptions of the exporting community. The BCI score was calculated factoring in the weighted contribution of SMEs and large firms to the overall GDP of Dubai. 
- issacjohn@khaleejtimes.com