Brighter manufacturing, construction outlook set to boost Dubai confidence

Dubai - SMEs hold a stronger outlook on all four parameters in the index, i.e. volumes, selling prices, employment and profits.

Robust expectations among manufacturing firms and construction-related activity had continued to support overall business confidence in Dubai during the past three months in spite of the seasonal slowdown during summer, shows the quarterly business confidence survey conducted by the Department of Economic Development (DED).
The survey for the second quarter of 2015 also revealed that exporters are more optimistic than the overall business community about sales revenues, volumes and profits, underlining the dominance of export and re-exports in overall economic activity in Dubai.
The Composite Business Confidence Index, or BCI, in Q2 2015 stands at 110.1 points, comparable to the index a year ago -112.2 in Q2 2014 - but 20 points lower than the previous quarter, which preceded the summer slowdown. Sales revenue expectations for Q3 2015 also fall in line with the forecast a year ago, but weaker when compared to the previous quarter. Most parameters in the survey reflect a similar trend. Businesses are also taking advantage of the slow summer months, focusing on capacity expansions and technology upgrades. Almost 77 per cent businesses expect to invest in capacity expansion compared to 74 per cent each in the first quarter of 2015 and Q2 2014.
Technology upgrades are planned by 71 per cent of the respondents in Q2 2015 as against 69 per cent in the previous quarter and 66 per cent a year ago. Manufacturing firms are more hopeful on sales revenues, volumes, selling prices, net profits and new purchase orders while the outlook for hiring is strongest among service sector companies. The survey also shows that SMEs have a modestly stronger forecast in comparison to large firms, as shown by their respective BCI scores of 111.6 points and 108.9 points.
SMEs hold a stronger outlook on all four parameters in the index, i.e. volumes, selling prices, employment and profits. The second quarter survey also reveals that expectations for sales revenues for Q3 2015 are as predicted a year ago, but weaker when compared to the previous quarter. The net balance for sales revenues is at a positive 29 per cent for Q3 2015, the same level as in Q3 2014, but less than the 45 per cent for Q2 2015. In terms of the proportion of respondents anticipating an increase in revenues, 47 per cent foresee higher revenues during Q3 2015 versus 45 per cent for Q3 2014 and 53 per cent for Q2 2015.
Over 79 per cent of the firms expected "no change" in their selling prices during Q3 2015. However, 12 per cent of the participants anticipate an increase owing to an underlying rise in the cost of raw materials. A select proportion of respondents have indicated that they intend to increase selling prices to take advantage of good business prospects in the near term.
The seasonal dip in sentiments is underlined by the outlook for sales volumes as 21 per cent of firms, mostly retailers, anticipate a decline due to lower customer footfalls, particularly as locals and residents tend to be on vacation during this period. On the other hand, 48 per cent respondents expect higher volumes during Q3 2015, attributed to new projects and customers from both domestic and export markets and higher demand for certain goods and services during the festival season.
- business@khaleejtimes.com

dubai -Growth in demand for business credit and personal loans in the UAE slowed further in the second quarter of this year as the industry continued to adjust from unusually fast growth in mid-2014, the central bank said on Wednesday.
In its quarterly credit sentiment survey, the net balance measure for business lending - the weighted percentage of respondents reporting an increase in demand for loans minus those reporting a fall in demand - dropped to 5.9 from 13.6 in the first quarter and 29.6 in the last quarter of 2014. Respondents' expectations for the quarter ahead also moderated, with the net balance measure for expectations falling to 13.9 from 24.6 a quarter ago and 33.3 two quarters previously.
Demand growth held up in the market for small and medium-sized enterprises and for Islamic finance during the second quarter, while softening in all other categories, the central bank said.
"Recent results reflect a reversion of conditions towards a more moderate growth path over the medium term," it said.

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dubai - Credit growth in the UAE is expected to be around 2 per cent this year, the chief executive of Mashreq bank, who is also chairman of the UAE Banks Federation, said on Wednesday. "Credit growth will be flattish," Abdul Aziz Al Ghurair told reporters on the sidelines of a conference in Dubai. He also forecast that the country's banking sector profits would rise about 10 per cent in 2015. Al Ghurair said some of the profit growth would come from lower impairments for bad loans.
His forecast of two per cent credit growth for 2015 was lower than some bankers were predicting just a few months ago. Gross bank lending in the UAE grew eight per cent last year, according to revised central bank data.
Compiled from Reuters

• Dubai