Projected sales boom lifts UAE business confidence
Business confidence in the UAE is on the upswing as preparations for Expo 2020 Dubai gain momentum, two surveys show.
While 83 per cent of the UAE's businesses anticipate sales growth over the next 12 months alone, at least 35 per cent are looking to grow by 15 per cent or more, according to HSB's "Navigator: Now, next and how" survey report.
The survey of over 9,100 companies in 35 countries and territories, noted that with businesses, tourists and officials from 190 countries set to visit the UAE for Expo 2020, companies in the UAE are already assessing the medium to long-term international opportunities the global event will bring.
According to another survey published by the National Bank of Kuwait, the UAE's economic outlook remains stable, despite a slowing global economy, trade disputes, softer energy demand and heightened geopolitical tensions. "Growth prospects in the medium term remain solid however further efforts towards diversification and continued progress in fiscal, private sector and regulatory reform will be required to weather the possibility of continued adverse external shocks," NBK report said.
"The UAE's significant diversification efforts has meant that the country is increasingly viewed as an innovative hub for trade - benefitting both domestic and international businesses. Vision 2021 combined with Expo's international reach and connectivity are driving opportunities for export minded companies," said Mike Davis, Head of Commercial Banking, HSBC UAE.
Dan Howlett, Regional Head of Commercial Banking, HSBC Middle East, North Africa and Turkey, said trade within the Middle East region is expected to maintain steady growth in the long-term, as will trade with a number of Asian markets. "Global trade is the hottest topic in the world of politics and economics right now - be it China and the US; the Belt and Road Initiative, or the UK/EU Brexit negotiations. While the outcomes are uncertain today, therein huge opportunities lie," said Howlett.
NBK Group Chief Economist, Dr. Saade Chami, noted that the UAE non-oil sector experienced fairly robust growth rates during 2010-2014, supported by the government's diversification efforts.
However, after the sharp fall in oil prices in 2014, non-oil growth began to slow, reaching 1.7 per cent in 2018, he said.
"The medium-term outlook for the UAE remains stable underpinned by sizable SWFs assets and the government commitment to forge ahead with reforms. Possible extensions to the Opec+ agreement could limit the oil sector growth in the medium term. The non-oil economy is expected to grow modestly by one per cent in 2019, trending up to nearly two per cent during 2020-21 as the impact of structural reforms, fiscal stimulus and the effects of Expo 2020 come into play," said Chami.
He said the UAE's government has rolled out a number of structural reforms to reduce the cost of doing business and improve the investment climate. A new investment law was recently issued to loosen foreign ownership requirements, and Dubai and Abu Dhabi have adopted several initiatives to support SMEs including supporting business accelerators and easing financing.
Chami argued that a difficult external environment has provided an opportunity for the UAE to redirect its trade closer to home. "Trade ties between the UAE and other GCC countries have consequently increased, with GCC countries' share of UAE non-oil exports rising from 23.2 per cent in 2017 to 34.1 per cent in 2018."
"The UAE has faced some headwinds from a global slowdown and trade disputes. The imposition of trade tariffs by the US directly affected the UAE steel and aluminum industry and US sanctions have caused UAE re-exports to Iran to drop significantly. Despite these challenges, the UAE has diverted part of UAE trade to other geographies, and this has so far proven effective," Chami said.
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