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EAU: Business decreases, production slows down

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Probable delay in economic recovery after the setback caused by the pandemic. Trading conditions in the UAE’s non-oil private sector worsened in October, new research data shows.

However, analysts believe the UAE’s new 58 billion Dh58 budget for 2021 will help accelerate the recovery as the stress on developing vital national projects increases.

His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, said the national economy will be among the fastest to recover in 2021 as the government dealt with the 2020 budget efficiently and has all the tools to continue its financial and operational efficiency in 2021.

The federal budget for 2021 keeps pace with global economic changes without compromising national development priorities.

“Our message to all federal entities for fiscal 2021 is to have balance in spending, flexibility in planning and efficiency in budgets,” he said.

According to a report by Horizon Research Group, the UAE ranks first in the Arab world in the post-Covid economic recovery index. The UAE is supported by many factors and areas of strength, including a strong institutional framework and advanced digital capabilities in various sectors, as well as the high education level of the population, he said.

The IHS Markit survey shows that increased competition and slow improvement in market activity led to weaker sales volumes over the month. As the pandemic accelerated in some regions, export growth remained moderate.

“As UAE companies continued to increase production levels, the rate of expansion slowed to a modest pace in October.

David Owen, an economist at IHS Markit, said demand in the UAE’s non-oil sectors suffered in October and that although the decline has been mild, the sector appears to have stalled. In fact, many companies are worried that the pandemic could further damage their business and spending.

“Companies are particularly concerned that costs will exceed revenues, leading to a further cut in the number of wages. The positive note, on the other hand, concerns cost inflation which remains weak, or slightly decreasing during the month. This should reduce the pressure on margins as prices continue to decline due to efforts to increase sales, ”continues Owen.

With demand declining, PMI data indicated a further decline in employee numbers at the start of the fourth quarter.

In Saudi Arabia, October data signaled a second consecutive month of output growth in the non-oil private sector economy. However, new businesses expanded more slowly than in September due to weak export volumes and a further impact of the pandemic on corporate spending. Reasons for new concern for the pace of recovery.

 

 

Edited by IICUAE on source: Khaleej Times

 

 

 

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