A key gauge tracking business conditions in Dubai in April registered its fastest one-month growth in more than two years, with the construction sector receiving a boost in the run-up to Expo 2020.
Emirates NBD’s latest Dubai Economy Tracker Index rose to 57.7 last month, compared with 56.6 in March, the fastest upturn since February 2015. A reading above 50 suggests the non-oil economy is growing, while a reading below 50 suggests that it is contracting.
The survey’s three key sub-sectors of construction, wholesale and retail and travel and tourism all experienced month-on-month improvements, with construction leading the way, at 57.9.
The wholesale and retail sector was at 57.8, followed by travel and tourism at 57.0.
“The latest Dubai Economy Tracker survey supports our view that investment in infrastructure ahead of Expo 2020 will be a key driver of Dubai’s growth over the next two to three years,” said Khatija Haque, the head of Mena research at Emirates NBD. “It is encouraging to see the sharp rise in the construction sector index in April, as this had lagged wholesale and retail trade and travel and tourism indices in the first quarter.”
Employment across all three sectors increased during April, albeit at modest rates, the bank said.
New business had its 14th consecutive monthly rise in April, with tracker panellists citing more construction projects, promotional discounts and a generally supportive economic backdrop.
Earlier this month, the IMF forecast that Dubai’s economy would grow by as much as 4 per cent this year, compared with an average of 2.3 per cent across the Mena area, thanks to an improvement in global trade and increased government spending in the run up to Expo 2020.
Not all economists are confident in the uptick in Dubai’s economy.
“While there could be some pickup in construction activity … we note two key challenges surrounding Dubai’s trade and services-led economy: how to sustain consumption and maintain competitiveness,” said Dima Jardaneh, the head of Mena economic research at Standard Chartered. “Resident consumers are more restrained in their spending … which is leading retailers to cut prices to entice buyers.”
Improving business conditions in Dubai contrast with a more cautious outlook for the UAE overall.
jeverington@thenational.ae
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