Rate of decline in Dubai economy slows in May

Dubai - The coronavirus pandemic has hit hard vital economic sectors of the Middle East.

The rate of decline in Dubai’s non-oil private sector economy slowed but endured a further downturn in May following the easing of some strict lockdown restrictions imposed since March combat the coronavirus pandemic, the latest purchasing managers’ survey revealed.
The IHS Markit Dubai Purchasing Managers’ Index increased to 46 in May from 41.7 in April but was still below the 50.0 mark that separates growth from contraction.
“While the Dubai PMI ticked up from the record low suffered in April, the latest survey data suggested economic conditions remain a long way from recovery in May,” said David Owen, economist at IHS Markit.
“Businesses highlighted that, despite restrictions on economic activity being partly lifted, weak consumer demand and a slow market response stopped them from making headway into covering their losses,” said Owen. 
“Subdued demand prompted further cuts to jobs, although the fall in employment did ease to the slowest rate seen during the pandemic. At the same time, the sentiment-led future output index signalled that firms remain unsure about the path to recovery. Activity is expected to improve in the year ahead, but it remains to be seen how long it will take for the Dubai economy to rebound following Covid-19,” said Owen. 
Falls in both output and new orders softened in the latest survey data, leading to the slowest drop in employment for three months. Nonetheless, a weak demand environment meant that overall conditions remained subdued, while business confidence ticked up only gradually from April’s record low,” said the survey report.
The report noted that a relaxation of lockdown measures in Dubai led to softer falls in both activity and new business in May, with the latter decreasing at the weakest pace for three months.
Rates of decline were still historically sharp, due to ongoing weakness in client demand as business confidence remained subdued. Consequently, firms made further cuts to employment, extending the current round of job losses that began in March. Firms continued to shed jobs in May to minimise their losses but the fall in employment was the slowest since February,” it said.
Bank of America said in a research note that Dubai could see a recession of around 5.5 per cent in 2020 as revenues are expected to drop in line with the pattern of the 2009 crisis.
— issacjohn@khaleejtimes.com