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Tuesday, July 23, 2024

UAE: Private Sector Optimism Peaks Since COVID-19 Onset

The UAE’s non-oil sector maintained strong performance in August, driven by substantial increases in new orders, higher investments, and tourism growth. This surge in confidence within the private sector is the highest observed since the onset of the Covid-19 pandemic in early 2020.

The seasonally adjusted monthly S&P Global UAE Purchasing Managers’ Index (PMI), released on Tuesday, registered 55.0 in August, a slight dip from July’s 56.0. Nonetheless, this indicates a significant improvement in operational conditions.

The PMI, comprising five key indices—new orders, output, employment, suppliers’ delivery times, and stocks of purchases—above 50 signifies overall economic expansion.

David Owen, senior economist at S&P Global Market Intelligence, noted, “Strong demand across the non-oil economy has instilled greater confidence in future activity. The Future Output Index suggests that business sentiment is at its highest since March 2020, consistently improving throughout most of 2023.”

The survey findings reflect an optimistic outlook for the non-oil sector, fueled by increased new orders, enhanced tourism, and rising investments. The UAE has stood out as one of the best-performing economies post-pandemic, achieving rapid growth in 2022 at approximately 7.9%. This momentum continued into 2023, albeit at a slightly slower pace following the extraordinary expansion in 2021-22.

Abdulla Bin Touq Al Marri, the Minister of Economy, expressed confidence in achieving 7% GDP growth in 2023, driven by reforms and Comprehensive Economic Partnership Agreements (CEPAs) with major trading partners. The PMI survey indicated a high level of confidence in sustaining robust economic activity over the next year.

Notably, private companies in the UAE reported a significant reduction in supplier lead times in August, marking the strongest improvement since July 2019. Employment levels also expanded during the survey period, albeit modestly.

Overall, the PMI data highlights positive trends, including increased input purchases, inventory growth, job creation, and improved supply chain conditions.

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