Gauge of non-oil sector economy posts 24th consecutive positive reading
Dubai economy tracker slips in February but remains positive
A key gauge of Dubai's non-oil private sector activity eased slightly in February but continued to suggest that the emirate's economic fortunes are on an upward trajectory, showing improving conditions for the 24th consecutive month.
Emirates NBD’s monthly Dubai Economy Tracker survey slipped slightly to 55.8 in February from 56 in January, as a drop in construction outweighed gains in the wholesale and retail sector as well as travel and tourism. A reading above 50 in the purchasing managers’ index (PMI) suggests the non-oil economy is growing, while a reading below 50 suggests a contraction.
"The PMI survey data for February continued to show solid growth in Dubai's economy, with the travel and tourism sector performing particularly well after a relatively soft Q4 2017," said Khatija Haque, head of Middle East and North Africa Research at Emirates NBD.
"Overall, we expect Dubai's economy to grow at a faster rate this year, underpinned by infrastructure investment and government spending."
The construction sector sub-index slipped to 53.9 in February from 55.2 in January. The wholesale and retail sector index rose to 57.3 from 56.1, while travel and tourism increased to 57.2 versus 55.7 in the same period.
The survey found that inflows of new business accelerated at the fastest pace since August last year, with the steepest rate of new work registered in the travel and tourism sector. There was strong demand from both domestic as well as foreign sources, the survey found.
The pace of inflation remained elevated last month despite an easing in input cost inflation. Rising cost burdens rose for the 24th month in a row, the survey found. But anecdotal evidence suggested that optimism for future growth prospects remained strong amid new project wins and an expected upturn in the economy.
The UAE government forecasted in January that its economy will grow 3.9 per cent in 2018, boosted by efforts the government has made to diversify its sources of income, including a 5 per cent VAT. The IMF in October forecast 3.4 per cent growth for 2018, compared with an estimated 1.6 per cent in 2016. Emirates NBD, Dubai’s largest bank, predicts growth of 3.4 per cent this year.