Sustained business confidence in the midst of economic transformation vindicates government policies
Bright sentiment points to economic reform success
An ever-growing number of forecasts, from the likes of the IMF, Standard Chartered, and ADCB are bullish about the UAE’s economic prospects for this year and next, on the back of a rise in infrastructure spending and a recovery in the global economy. What’s particularly reassuring for the UAE is that such predictions are backed up by on-the -ground conditions, and particularly the sentiment of the local business community.
Emirates NBD’s UAE Purchasing Managers’ Index for September, released yesterday, confirms that business sentiment for the country’s non-oil economy is bullish. The closely watched gauge hit an average of 56.1 for the three months to the end of September, its highest quarterly reading for two years.
And while the index’s overall score dipped to 55.1 during the month from 57.3 in August, this latter figure was a four month high, with September’s reading comfortably in the growth phase indicated by an index reading of over 50.
"The survey suggest[s] that economic growth accelerated last quarter, and that domestic demand remains solid, despite relatively modest jobs growth," commented Khatija Haque, Emirates NBD’s head of Mena research, noting particularly strong growth in output and new work during the last month.
The picture of economic confidence was reflected in a similar survey in Saudi Arabia; while the headline score slipped slightly last month, output and new order growth in the country remain strong, with those surveyed reporting strong underlying demand in the domestic economy.
Such strong fundamentals, coupled with key reforms and a successful $12.5 billion debt issuance last month, bode well for business activity in the coming weeks and months, according to Emirates NBD.
Much work remains to be done for both the UAE and Saudi Arabia in a changing world, with old realities giving way to a new and often uncertain future. However both countries have shown boldness in embracing change in their bids to overhaul their economies for a new era. The fact that business confidence remains so healthy demonstrates that the countries’ governments and business communities are capable of facing the challenges of the future.