Dubai: Business confidence in the UAE has rebounded strongly and hit its highest level since 2015, indicating that companies are feeling more positive about the economy and expanding their headcount.
According to the latest edition of the Global Economic Conditions Survey of CFOs and finance professionals, the UAE has outperformed its peers in the Middle East region, with hiring activity already starting to pick up and state spending showing no signs of slackening.
“Confidence in the UAE rebounded strongly in Q1 2017, with the employment component up on the previous quarter and government spending still at elevated levels,” the report, prepared by the Association of Chartered Certified Accountants (Acca) and Institute of Management Accountants
The improvement in business sentiment is consistent with other reports, which indicate that the economy is gaining fresh momentum after a slow period. The latest Emirates NBD Dubai Economy Tracker Index showed that Dubai’s non-oil private sector grew at its fastest rate in March since the first quarter of 2015, while hiring levels started to inch up.
A major employment site in the UAE, Bayt.com, reported that based on recent job postings, more than 10,000 new positions have opened up at various companies across the country between January and March 2017 alone. Recruitment specialist GulfTalent also reported that nearly half (47 per cent) of companies in the UAE and the rest of the GCC have plans to expand their payrolls this year.
The latest business confidence report said that UAE’s performance will be reinforced further by increased government expenditures and construction activity in the lead-up to World Expo 2020 in Dubai. Analysts, however, cautioned against the potential increase in lending costs.
The Dubai government is expected to spend 27 per cent more on infrastructure this year, as it seeks to complete a host of projects for the World Expo hosting. A number of large-scale leisure projects, including the $1 billion IMG Worlds of Adventure, the world’s largest indoor theme park, and the $3.5 billion Dubai Parks and Resorts have recently opened for business.
“The UAE in particular has performed well due to our sizeable non-oil sector and strong fiscal position, which allows us greater protection from falling oil prices,” said Lindsay Degouve de Nuncques, head of Acca Middle East.
“However, we are likely to see borrowing costs rise across the Middle East in coming months in response to expected rises in US interest rates, as many of the exchange rates across the region are tied to the US dollar. Hopefully we can maintain business confidence while also efficiently navigating these challenges.”
Across the Middle East, business confidence also picked up strongly as oil prices have started to recover. “However, there are still challenges on the horizon, with oil production likely to fall in 2017 as other countries look to reduce oil output.”
