Strong performance of the non-oil private sector in the UAE during the first quarter

2023-04-23 20:43:56

Mustafa Abdul Azim (Dubai)

The non-oil private sector in the UAE recorded a strong performance during the first quarter of this year 2023, benefiting from the recovery of business, trade, tourism and investment activities, which witnessed great momentum during the first three months of the year that exceeded pre-pandemic levels.
The data of the “Standard & Poor’s Global” index for purchasing managers in the UAE, during the period from January to last March, showed an accelerated growth in the performance of the index, which recorded 54.1 points in January, before it rose during February, recording the strongest rise since October 2022. , With companies’ expectations improving and supply chains performing well despite strong demand for production inputs, as well as delivery times improving at the fastest pace in nearly three and a half years. The index rose to 54.3 points in February, as the reading indicated a strong improvement in the conditions of the sector, which was generally in line with the long-term average for the series (54.2 points).
Last March, non-oil private sector activity in the UAE recorded its strongest performance in 5 months, accompanied by the fastest increase in employment since July 2016, supported by strong growth in new business and improved demand conditions.
March data indicated a booming labor market in the UAE’s non-oil private sector economy, as the acceleration of new demand growth and pressures on absorptive capacities led to the fastest increase in employment since July 2016.
The data stated that the growth of new business during the month of March was the fastest since October of last year, which encouraged companies to increase their stocks of production inputs at the strongest rate in five years, while companies continued to benefit from relatively moderate cost pressures, despite shrinking margins. Profits again with lower product prices.
The index recorded an increase of 1.6 points from 54.3 points in February to 55.9 points in March, which is the largest monthly increase since October 2021, with all five sub-components providing a positive impact on the direction of the index.
Among the most prominent sub-indicators was the Employment Index, which rose to its highest reading since July 2016 and indicated a strong increase in the size of the labor force.
The significant increase in employment levels was a reflection of the improvement in demand conditions, as some companies indicated that the increase in new purchase orders led to the need for more workers.
At the same time, the growth rate of new orders rose in March, to its highest level in five months, as companies highlighted an increase in market demand and increased tourist flows.
Optimistic forecast
Expectations about future activity in the non-oil economy improved to a five-month high in March and were in line with average expectations recorded since the start of the COVID-19 pandemic, with companies generally looking for continued market growth to provide increased opportunities over the next 12 months. next month.
The performance of the non-oil-producing private sector in the UAE during the first quarter is consistent with the optimistic expectations of international financial institutions for the growth of the non-oil sector in the UAE this year. Abu Dhabi’s non-oil economy is likely to grow this year by more than 5.5%, and Dubai’s economy by about 4.7%.
Optimistic forecast
The International Monetary Fund also expected the UAE’s non-oil economy to grow by 4% in 2023, while the World Bank expects, in its latest report on global economic prospects, that “the real GDP of the UAE will grow by 3.6% in 2023 and that the non-oil sector will grow.” Oil prices increased by 4.2% in 2023, supported by strong domestic demand, especially in the tourism, real estate, construction, transportation and manufacturing sectors.