Companies in Dubai expect business conditions to improve in the third quarter of 2021 as investor confidence grows ahead of Expo 2020, according to a survey by Dubai Chamber of Commerce & Industry.
Two-thirds of the business leaders questioned said they expect to see a better business environment during the third quarter, compared to 51 per cent who said the same in the previous quarter, according to the Business Leaders’ Outlook for Q3 2021 survey released on Sunday. About 66 per cent were more optimistic about the business environment, compared to 48 per cent in the second quarter.
These were the most optimistic survey readings since the last quarter of 2014, according to Dubai Chamber.
"The findings demonstrate Dubai’s success in minimising the impact of the Covid-19 pandemic through a series of policies, initiatives and measures that have ensured a favourable business environment and addressed new challenges created by the pandemic," Hamad Buamim, president and chief executive of Dubai Chamber, said in a statement. "Expo 2020 Dubai is expected to fast-track Dubai’s economic recovery and boost the emirate’s appeal among foreign companies and investors."
Business activity in Dubai’s non-oil private sector economy expanded in June, supported by a seventh monthly rise in output and an upturn in construction and tourism activity, according to the IHS Markit Purchasing Managers' Index released on Sunday. Widespread testing and high vaccination rates have helped the UAE to boost business confidence as its economy continues to recover from the coronavirus-induced slowdown.
The survey of company executives in the emirate showed that factors seen as affecting business conditions in the third quarter have improved on the previous quarter, with the most significant pick-up seen in the "financial transactions" category, Dubai Chamber said.
About 57 per cent of business leaders said they expect a recovery in oil prices to improve the environment in the third quarter.
Some 62 per cent of respondents said global restrictions on trade and travel may risk impacting business conditions in the emirate, according to the Dubai Chamber survey.
The overall increase in business confidence is due to growing domestic demand, economic stimulus initiatives and the progress of the vaccination drive, it said.
Small-and-medium-enterprises (SMEs) were particularly optimistic about Dubai’s short-term economic outlook, compared to large companies serving regional and global markets, the survey showed.
However, late payments, debt collection, strong price competition and the high cost of raw materials were identified as key challenges and risks that could potentially impact the economic situation, Dubai Chamber said.
SMEs make up about 95 per cent of all companies in Dubai, employ 42 per cent of the workforce and contribute about 40 per cent of the emirate's gross domestic product, according to government agency Dubai SME.
On June 28, Sheikh Mohammed bin Rashid, UAE Prime Minister and Ruler of Dubai, announced new initiatives aimed at supporting family companies, helping start-ups and attracting more skilled workers to the UAE.