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The latest Purchasing Managers’ Index data showed purchase growth at the highest level in seven years, as lower fuel prices help ease the spending burden on companies and encourage lower prices for other items
The UAE, the second-largest economy in the Arab world, grew by 3.8% in 2021 and is expected to grow by 5.4% and 4.2% in 2022 and 2023, respectively. — file photo
Despite growing fears of a looming global recession, UAE businesses recorded strong growth in activity in August, mainly due to lower fuel prices and rising demand, latest data showed.
Despite the normally sluggish summer, the UAE Purchasing Managers’ Index (PMI) continued to move higher in August, reaching a 38-month high of 56.7, indicating a buoyant turnaround in business conditions in the non-oil sector.
The latest Purchasing Managers’ Index data showed that purchases grew at their highest level in seven years, as lower fuel prices helped ease the spending burden on companies and encouraged lower prices for other items. Confidence for the coming year fell to a 17-month low in August amid warning signs that the global economy could enter a recession by year-end, even as businesses reported stronger demand conditions and lower selling expenses also boosted new orders S&P Global UAE Sourcing said panelists in the Managers’ Index survey.
The UAE, the second-largest economy in the Arab world, will grow by 3.8% in 2021 and is expected to grow by 5.4% and 4.2% in 2022 and 2023, respectively, according to the central bank’s latest forecast. The International Monetary Fund expects the economy to grow by 4.2% this year, while Emirates NBD forecasts a growth of 5.7%.
A major economic pillar, the UAE’s hospitality sector is bracing for a significant recovery as global travel restrictions ease and tourist arrivals are expected to surge during the 2022 World Cup in Qatar. Dubai welcomed 7.1 million international tourists as of June 2022, an increase of 183% year-on-year in the number of overnight visitors. Industry sources say hotel occupancy in the UAE is expected to exceed 75% in the coming months.
Sales growth accelerated further, supported by additional efforts to offer discounts to customers, said David Irwin, an economist at S&P Global Market Intelligence.
“Input costs fell notably for the first time since January 2021, as lower fuel prices helped ease the spending burden on companies and encouraged lower prices for other items. Another drop marked a notable shift in inflationary pressures, which It has reached a new yearly high in November-June.”
Owen said the data offered hope to other countries struggling with persistent inflation, although concerns remained that global energy supply constraints would continue to push up prices. “Despite positive signs of output and new orders, businesses are showing greater hesitation about the duration of this strong growth phase. Business confidence for the coming year fell to 17 points in August amid warning signs that the global economy may be entering. The monthly low will be in recession by the end of the year,” Irving said.
The Purchasing Managers’ Index survey showed that the growth in sales and the release of expenses encouraged companies to increase investment in procurement and employment, and the growth rate of the former accelerated to a three-year high. Businesses benefited from lower input costs in August, the first drop since January 2021, the data showed. marginal speed,” the survey report said.
In Saudi Arabia, business growth hit a 10-month high in August, as improved demand conditions boosted new business and activity.
The seasonally adjusted S&P Global Saudi Arabia purchasing managers’ index was 57.7, rising to its highest level since October 2021 from 56.3 in July.
“Saudi Arabia’s purchasing managers’ index indicated that the non-oil economy was more resilient in August, with business activity and sales continuing to surge despite reports of growing global economic distress,” Owen said.
Total new orders rose at their fastest pace since October, driven by improving customer demand, rising exports and a broad recovery in economic conditions since the pandemic.
— issacjohn@khaleejtimes.com
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