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Dubai's non-oil economy stabilises in June

Issac John /Dubai
issacjohn@khaleejtimes.com Filed on July 9, 2020 | Last updated on July 9, 2020 at 09.10 pm
The IHS Markit report says that some economic sectors in Dubai were on the path back to normality, though other respondents presented a more cautious picture.

(Reuters file)

Emirate emerges from contraction as business confidence strengthens

Dubai's non-oil economy stabilised in June on the back of a resurgence in business confidence as lockdown restrictions eased, the IHS Markit Dubai survey on Thursday showed.

Business activity witnessed an uptick for first time since February with the Purchasing Managers' Index data signalling an end to the recent downturn across Dubai's economy, as the region relaxed measures designed to stop the spread of coronavirus.

Businesses saw a tentative rise in new work as activity levels strengthened, although payroll numbers were again reduced sharply. Confidence about the business outlook continued to improve, reaching the highest since March.

The headline IHS Markit Dubai PMI rose from 46.0 in May to the neutral 50.0 mark in June, to signal no change in overall business conditions at the end of the second quarter.

David Owen, Economist at IHS Markit, said the survey data offered hopeful signs for the Dubai non-oil private sector. "Business activity was back in positive territory as firms were given a welcome boost from the relaxing of lockdown measures," he said.

"Some sectors were on the path back to normality, according to survey respondents, though others presented a more cautious picture, finding that demand in some areas, notably travel and tourism, was still extremely weak," he added.

"Firms direly need a boost to cash flow, as many have been left struggling with low revenues and high cost burdens in June. Workers have been hard-hit, with employment dropping sharply for the fourth month in a row."

More businesses were optimistic that activity will grow over the coming year. Rising from a record low in April, business expectations were nonetheless much weaker than prior to the onset of the Covid-19 pandemic.

According to a report by Smart Dubai, the Dubai government demonstrated a high level of resilience in response to the Covid-19 pandemic, which has helped the emirate avoid any reduction in the quality of experiences and services being offered to residents and visitors.

Dr Aisha bint Butti bin Bishr, director general of Smart Dubai, the Covid-19 outbreak has led everyone to view challenges differently and to think of ways to transform them into opportunities, building a brighter future for the UAE.

"The pandemic had confined people to their homes at very short notice," Dr Bin Bishr explained. "Educational training for students and work across the city, both at government and private sector entities, were conducted remotely and world governments found themselves facing unprecedented challenges. Dubai and the UAE were no exception. All entities in Dubai immediately sprang to action to preserve the government system that has allowed the UAE to earn its leading international status over the years."

The report observed that the disruption caused by the pandemic outbreak on services in Dubai was limited, where numerous organisations reported that their infrastructure and services were effective and adequately prepared for digital operations and providing services online, while others managed to digitise any remaining offline services quickly and provided them for immediate use online.

- issacjohn@khaleejtimes.com

author

Issac John

Editorial Director of Khaleej Times, is a well-connected Indian journalist and an economic and financial commentator. He has been in the UAE's mainstream journalism for 35 years, including 23 years with Khaleej Times. A post-graduate in English and graduate in economics, he has won over two dozen awards. Acclaimed for his authentic and insightful analysis of global and regional businesses and economic trends, he is respected for his astute understanding of the local business scene.


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