Economy

Dubai’s non-oil economic growth at five-year high

March 11, 2024, 10:27 AM

Tourists at Lake Burj Khalifa in Dubai. Businesses are confident that growth will continue throughout 2024

PMI highest since May 2019
Wholesale and retail prices fall
Companies optimistic about 2024

Dubai’s non-oil economy has recorded its highest growth since before the pandemic, according to the latest business sentiment survey for the emirate.

At 58.5 in February, the S&P Global Dubai Purchasing Managers’ Index (PMI) increased from January’s 56.6 to the highest seen since May 2019.

The number is well above the 50.0 mark which separates growth from contraction, and companies are confident of continued growth for the remainder of the year.

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“Inflationary pressures remained soft which encouraged greater sales promotions, while employment and inventory growth strengthened,” said David Owen, senior economist at S&P Global Market Intelligence. “All this suggests that the non-oil sector’s expansion has further to run during 2024,”

Prices fell at the fastest pace in eight months in February, with the most prominent reduction seen in the wholesale and retail sectors.

Businesses operating in Dubai expect increased buying over the holy month of Ramadan, thanks to rising tourist traffic and improved shopping mall offerings.

Ashish Panjabi, chief operating officer at Jacky’s Retail LLC, told AGBI he is anticipating 8 percent growth in spending within Jacky’s retail segment over the month.

Hayan Merchant, founder and CEO of Navitus Parfums, forecasts a 25 percent increase in fragrance purchases this year, driven by a boost in population and tourist numbers.

Over a third of respondents in the Dubai PMI survey reported an increase in output from January, marking the fastest upturn in one-and-a-half years.

Increased demand, strong market conditions and greater project work were among the reasons cited by companies for the higher output.

Greater workloads in turn led to increased hiring activity during February, with the pace of job creation quickening to the sharpest recorded since August 2015.

“Output and new order volumes are proving especially robust, with companies reporting new clients, higher demand and a still improving economy post-pandemic,” added Owen.

Companies signalled an adverse impact on supplier performance as a result of shipping disruption due to the Red Sea crisis.

Erika Doyle, founder of non-alcoholic drinks marketplace Drink Dry Store, said the impact of the ongoing disruption on import costs could weigh down businesses.

“If freight costs rise by over 300 percent, a price hike is inevitable, though we plan to hold our prices steady until after Ramadan to support customers’ celebrations,” she said.