Dubai: Business confidence in the UAE is on the rise supported by a stable economic outlook in the medium term, as preparations for EXPO 2020 DUBAI ramp up, said at least three different reports on UAE economy released on Tuesday.
The latest HSBC ‘Navigator: Now, next and how’ survey of over 9,100 companies in 35 countries and territories, finds that 83 per cent of the UAE’s businesses anticipate sales growth over the next 12 months, with at least 35 per cent looking to grow by 15 per cent or more.
With businesses, tourists and officials from 190 countries set to visit the UAE for EXPO 2020 DUBAI, companies in the UAE are already assessing the medium to long-term international opportunities the global event will bring.
On prospects for cross-border expansion over the next two years, 92 per cent had a positive outlook on international trade — well ahead of the global average of 81 per cent and seven percentage points higher than responses to the same question a year ago.
“The UAE’s significant diversification efforts has meant that the country is increasingly viewed as an innovative hub for trade — benefiting both domestic and international businesses. Vision 2021 combined with Expo’s international reach and connectivity are driving opportunities for export minded companies,” said Mike Davis, Head of Commercial Banking, HSBC UAE.
The UAE’s economic outlook remains stable, despite a slowing global economy, trade disputes, softer energy demand and heightened geopolitical tensions, according to research published by the National Bank of Kuwait (NBK).
Headwinds from the uncertain global and regional geopolitical situation have had an adverse impact on economic growth. However, the study observed that growth prospects in the medium term remain solid and further efforts towards diversification and continued progress in fiscal, private sector and regulatory reform will be required to weather adverse external shocks.
“The medium-term outlook for the UAE remains stable underpinned by sizeable SWFs (sovereign wealth funds) assets and the government commitment to forge ahead with reforms. Possible extensions to the Opec+ agreement could limit the oil sector growth in the medium term. The non-oil economy is expected to grow modestly by 1 per cent in 2019, trending up to nearly 2 per cent during 2020-21 as the impact of structural reforms, fiscal stimulus and the effects of EXPO 2020 come into play,” said Dr. Saade Chami, NBK Group Chief Economist.
New trade focus
According to the HSBC study, UAE businesses view protective trade policies as an opportunity — more so than anywhere else in the Middle East with 72 per cent of businesses in the country believe there are advantages to be gained.
“It is exciting to see a growing number of businesses proactively assessing how and when to take advantage of new corridors for growth. We expect trade within the Middle East region to maintain steady growth in the long-term, as will trade with a number of Asian markets,” said Dan Howlett, Regional Head of Commercial Banking, HSBC Middle East.
The NBK research too shows, a difficult external environment has provided an opportunity for the UAE to redirect its trade closer to home. Trade ties between the UAE and other GCC countries have consequently increased, with GCC countries’ share of UAE non-oil exports rising from 23.2 per cent in 2017 to 34.1 per cent in 2018. Saudi Arabia tops the list of regional trading partners, attracting 16 per cent of the UAE’s non-oil exports.
PMI points to improving business conditions
Dubai: The UAE’s non-oil private sector economic growth has moderated so far this year with the UAE’s purchasing managers’ index (PMI) remaining flat in October. However, overall, the reading pointed to a slight improvement in business conditions.
October PMI data from IHS Markit signalled private sector output levels grew at a relatively subdued pace, with businesses restraining purchasing activity. To restore sales, companies continued price discounting despite a modest rise in input prices. The headline seasonally adjusted UAE PMI was unchanged at 51.1 in October. .
Despite tough market conditions at present, business expectations towards future output improved in October. Firms were positive that new strategies and greater investment ahead of the Expo 2020 would lead to higher levels of activity.