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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The Dubai Statistics Center report pointed out that the rising gas prices are to blame for a 4.70% yearly increase in transportation expenses.

In the meantime, compared to the same month last year, insurance and financial services costs increased by 8.97% in October.

The report also noted a 6.7% annual increase in the cost of housing, water, electricity, and fuel and gas. Furthermore, there was a 3.52% increase in food and beverage expenses and a 2.94% increase in restaurant and hotel service prices.

According to official data, tobacco product prices fell by 5.78% in October of last year when compared to the same month last year.

The report also revealed that the October inflation rate of 4.27% is higher than the September 2023 inflation rate of 3.81%.

Dubai had an inflation rate of 23.3% in August compared to 1.1% and 2.1% in July and June, respectively.

In an article, Jeanne Walters, Senior Economist at Emirates NBD, noted that the rise in Dubai’s CPI is the fastest rate of inflation since March.

“The move was expected and entirely due to higher transport costs as petrol prices rose in October,” she said.

The 2.67% increase in restaurant and hotel service costs was the reason given for the monthly increase in inflation.

In the meantime, October saw a 0.57% increase in housing, water, and electricity costs over the previous month. In addition, during the same time period, the price of fuel and gas increased at a comparable rate.

“Inflation is likely to moderate again in November as petrol prices declined month on month, and we retain our forecast for average CPI at 3.5% this year, down from 4.7% in 2022,” Walters commented.

The director of the International Monetary Fund for the Middle East and Central Asia, Jihad Azour, said in October that the region’s inflation is progressively beginning to decline.

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The consortium was initially formed by Dubai Economy, Dubai International Financial Centre, Emirates NBD, Emirates Islamic, Commercial Bank of Dubai, HSBC, Abu Dhabi Commercial Bank, RAKBANK and Mashreq Bank. The platform holding close to 50 percent of corporate eKYC records in the UAE.

In this regard, Dr. Lowai Mohamed Belhoul, director-general of the Government of Dubai Legal Affairs Department told the media, “The Government of Dubai Legal Affairs Department is proud to be one of Dubai Economy’s key strategic partners on this first-of-its-kind initiative for the region where we have provided and continue to provide legal support to Dubai Economy in their consolidation efforts with DIFC and the formation of the Consortium Agreement for the UAE KYC Blockchain Consortium.”

Earlier this year, UAE-based blockchain startup Verofax raised around $1.2 million in its seed funding round. The investment round for Verofax was led by Trove Capital. Other investors that also participated include MFD Holding, Kepler Fund Managers and Casablanca Holding.

With regard to the funding, co-founder and chief executive officer Wassim Merheby told the media, “US, EU, China and Russia have already adopted regulations for retailer and ecommerce accountability on fake merchandise sold through their marketplaces. Verofax simply adds certainty in global trade with item digital ID throughout every product lifecycle.”

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The platform will facilitate secure digital customer onboarding, instant bank account functionality and sharing of verified KYC data between licencing authorities and financial institutions.

The initiative is powered by norbloc, a global leader in blockchain KYC technology.

It has the full support of Smart Dubai and the Central Bank of UAE. The project was first announced by Dubai Economy and Emirates NBD earlier in the month of February this year.

Omar Bushahab, CEO of Business Registration & Licencing (BRL) sector in Dubai Economy, told the media, “This marks a key milestone in establishing a UAE-wide ecosystem for KYC data sharing and instant digital onboarding of companies by financial institutions. It is in alignment with the government’s vision around digitisation and paperless as crucial strategies that enable continuation and sustainability, especially during these challenging times, further enhancing ease of doing business in the country.”

“Emirates NBD is the first banking group to go live on the platform with its initial use case covering E20, its digital business bank. The next milestone will be the go-live of Emirates NBD’s additional use cases and of our remaining banking partners along with the official release of the Consortium Agreement that will govern the ecosystem and outline how data will be shared between Consortium Members. We are also in advanced discussions with a second wave of financial institutions and free zones to further expand the initiative, and we welcome the remaining financial institutions and free zones to join this effort.”

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The contraction in Dubai’s GDP is mainly due to the impact of the coronavirus pandemic on its tourism and business sectors.

Said that, real estate activity registered a growth of 3.7 percent in Q1 2020. Also, manufacturing and the government sector in Dubai retained their growth during the same period.

The Dubai Statistics Centre further revealed that the finance and insurance sector recorded a slight growth of 0.3 percent and contributed 11.6 percent to Dubai’s overall economy in the first quarter.

Arif Al Muhairi, Executive Director of DS C told the media, “Dubai’s economy witnessed healthy levels of growth in 2019. It was expected that in the first quarter of 2020, the economy will experience a decline due to the global impact of the COVID 19 pandemic.”

“The worldwide restrictions on movement for individuals through air, sea, and land entry points, as well as the unprecedented intensification of precautionary measures, which limited the flow of freight across borders, had significant repercussions on international trade and the global economy. Being a central player in international trade and a vital global passenger transit hub, Dubai’s economy was affected by these exceptional circumstances,” he added.

The UAE’s GDP is also expected to contract by 3.5 percent in 2020, according to the International Monetary Fund (IMF).

According to experts, UAE’s economy will recover to pre-Covid-19 levels only in 2022.

Besides COVID -19, there are other negative factors at play weighing on the UAE economy, such as low oil prices and a strengthening currency.

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The survey was conducted during the last quarter of 2019. It appears that 74 percent of the UAE nationals and expats have rated the economy to be good or excellent. However, 25 percent of the respondents believe that the economy is under recession. Also, the percentage of respondents who believe that the economy will recover over the next 12 months decreased to 41 percent from 55 percent. 

Mohammed Ali Rashed Lootah, CEO of the Commercial Compliance & Consumer Protection (CCCP) sector in Dubai Economy, told the media that, “Dubai’s economy recorded positive results during Q4 2019 as a result of the initiatives launched by the government as directed by Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai. The public and private sectors responded overwhelmingly to these initiatives consolidating optimism among various communities and attracting more domestic and foreign investments in varied sectors.” 

Nearly 77 percent of UAE nationals are currently confident about finding a job. Of those nationals, 22 percent describe the situation as excellent, while 55 percent as good. 

Employment was a huge concern for expats and nationals in the fourth quarter of 2019. About 86 percent of consumers said that they are easily able to meet day-to-day expenses. The Consumer Confidence Index draws insights into consumer’s perception of the economy.

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The Dubai real estate development committee comprises the General Secretariat of the Dubai Executive Council, Dubai Land Department and semi-government development companies such as Investment Corporation of Dubai, Wasl Properties, Dubai Properties, Emaar, Meraas, Nshama, Nakheel, Meydan, Dubai Silicon Oasis Authority, Dubai South and Dubai Multi Commodities Centre.

The Dubai real estate development committee will focus on developing a strategy to increase competitiveness in the real estate sector  — making it significant to Dubai’s economy. 

Prime Minister of the United Arab Emirates and ruler of the Emirate of Dubai Shaikh Mohammed Bin Rashid Al Maktoum  on his official Twitter page, said, “We instructed Shaikh Maktoum to ensure that semi-government real estate companies do not compete with private investors and to develop a comprehensive strategic plan and vision for all major real estate projects in the emirate for the next ten years.”

At first, the committee will study the sector’s situation in Dubai and assess all future real estate projects. The reason for doing so is to prevent duplication of projects in the emirate. With that, all major real estate projects will be unique. 

Also, Dubai Land Department (DLD) and Ahmad Bin Hezeem & Associates (BSA) signed a memorandum of understanding to boost local and foreign investment opportunities in Dubai. The new initiative will streamline purchase and sale of properties by corporate entities with maximum foreign ownership. This way, Dubai’s property market will be open to a large pool of corporate investors. 

DLD will be introducing a whole suite of investment products to lift the current restrictions in Dubai’s real estate laws. With that, the real estate sector  is likely to thrive on more investment opportunities in the future. 

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By reducing transportation costs, the strategy aims to save Dh900 million annually.  In addition, by reducing environmental emissions by 12%, it will also create savings of Dh1.5 billion a year. Increasing the efficiency of transportation is expected to lead to savings of Dh18 billion annually.

The Dubai autonomous vehicle strategy resolution is the first in a series of legislative actions to increase the efficiency, reliability, and security of Dubai transport through smart mobility solutions. The current legislation seeks to regulate autonomous vehicle testing.

According to the legislation, the Dubai Road Transport Authority is designated to review the technical aspects and standards related to autonomous vehicles in Dubai in the vehicle manuals. The Dubai RTA will also issue licences and ensure compliance with the Dubai autonomous vehicle regulations.

The government has also tasked RTA to develop the infrastructure required to conduct autonomous vehicle tests in Dubai. The Crown Prince also said the resolution will ensure the highest levels of safety for autonomous vehicles and achieve the objectives of the Dubai autonomous vehicle strategy.

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According to the DED’s survey, in the Q1 2019, 59 percent of the companies in the emirate are optimistic of growth compared to 41 percent in the corresponding period last year. Only seven percent of the businesses expect a decline in growth compared to eight percent last year.

The financial services sector is expected to grow faster in 2019 at 2.4 percent compared to a 0.6 percent growth in the past year. DED expects tourism to grow by 6.2 percent in 2019 and 2020.

For 2020, the government expects foreign investments to reach AED50 billion from AED38 billion in 2018. Economic growth is set to spike in 2020 on the back of Expo 2020 activities and higher investment inflows.

The government expects the deceleration in economic growth in 2021 as a natural result of the tapering of the spike in economic activities in 2020.

During the first three months of 2019 the government granted 6709 new business licences, which is a 29 percent increase over the corresponding period in 2018.

The six-month Expo 2020, which will start in October next year, is alone expected to add AED23 billion in gross value added to the economy, a key economic metric. DED forecasts that Expo 2020 might add AED62 billion of gross value to the economy between 2021 and 2030.

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In the last two years, the conditions have significantly improved month-on-previous-month, according to the statistics. However, last month, the sectors: wholesale and retail achieved high ranking in performance.

New business segments such as tourism and travel rose in February. Fluctuations in employment opportunities were significant in these sectors, and growth was recorded in wholesale and retail.

Khatija Haque, head of MENA research at Emirates NBD, said: “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.”

“Overall, we expect Dubai’s economy to grow at a slightly faster rate this year, underpinned by infrastructure investment and government spending,” Haque added.

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