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Dubai’s non-oil PMI touches new peak as country’s economic diversification accelerates

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Dubai's PMI was 56.6 in January 2024 as opposed to 57.7 in December and 56.8 in November 2023

According to a poll, Dubai’s non-oil private sector continued to rise in February 2024, with the Emirate’s Purchasing Managers’ Index hitting 58.5, the highest level since May 2019.

S&P Global’s PMI report states that a rise in new orders was the primary factor behind Dubai’s private sector’s notable expansion. Companies hired workers at their quickest rate in the previous eight years as a result of this rise.

Dubai’s PMI was 56.6 in January 2024 as opposed to 57.7 in December and 56.8 in November 2023.

Any PMI rating above 50, according to S&P Global, denotes expansion in the non-oil sector, while values below 50 denote contraction.

“The Dubai PMI surged to 58.5 in February, which is its joint-strongest rating since 2015 – matching May 2019 – and implies that the Dubai non-oil economy is growing rapidly so far this year,” stated David Owen, senior economist at S&P Global Market Intelligence.

“The reading indicates that, according to global PMI data, the Dubai non-oil industry is among the fastest growing internationally,” he continued.

According to the survey, 36% of participants reported an increase in output from the previous polling period, which represents the fastest upturn in 1.5 years.

Businesses reported better output in February 2024 due to increased project activity, robust market conditions, and an increase in demand.

According to the survey, average output charges dropped at their quickest rate in eight months, with the wholesale and retail industries witnessing the biggest declines.

“Production and new order volumes are proving particularly solid, as businesses report gaining new customers, increased demand, and a post-pandemic economy that is still recovering,” stated Owen.

Similar to this, the pace of new business growth picked up steam halfway through the first quarter of 2024, having dipped to a five-month low in the PMI. All of the major industries the poll tracks had more pronounced gains during this time.

Compared to January 2024, non-oil enterprises in Dubai were more optimistic about the future, with about 19% of poll respondents anticipating growth in output and the remaining respondents staying neutral.

“While employment and inventory growth strengthened, inflationary pressures remained low, encouraging more aggressive sales promotions. According to all of this, the non-oil sector’s growth needs to continue through 2024,” Owen continued.

The latest landmark comes close to a month after the publication of a report which stated that the United Arab Emirates (UAE) reported a record-high non-oil trade volume of USD 952.93 billion in 2023, thereby marking a 12.6% increase from 2023.

In February 2024, Minister of Foreign Trade Thani Al Zeyoudi emphasised the significance of UAE’s non-oil sector, which outpaced overall GDP growth in the first half of 2023, registering a robust 6% increase.

Zeyoudi underscored the pivotal role of Comprehensive Economic Partnership Agreements (CEPAs) in driving trade expansion, citing substantial growth in trade volumes with key partners such as India and Turkey.

Despite external challenges, including disruptions to Red Sea shipping routes due to Houthi attacks, Minister Zeyoudi expressed confidence in UAE’s economic resilience, while reaffirming the country’s preparedness to navigate global uncertainties, citing adaptability and robustness in facing challenges.

UAE’s services sectors, including travel and tourism, information technology, financial services, and professional services, have been contributing significantly to the expansion of the Gulf nation’s non-oil trade since 2023.

Also, UAE’s major non-oil exports, such as gold, aluminium, jewellery, copper wire, and ethylene polymers, have showcased remarkable growth, further diversifying the nation’s export portfolio.

Minister Zeyoudi highlighted substantial growth in non-oil commodity exports, which surged by 16.7% to reach 441 billion dirhams in 2023, constituting a notable portion of UAE’s foreign trade.

Furthermore, re-exports experienced a significant uptick, rising by almost 7% to reach 690 billion dirhams, reflecting the country’s pivotal role as a regional trade hub.

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