Dubai business upbeat on sales and profits in Q1 of 2012

• Quarterly business survey reveals high level of optimism across key business sectors, driven in part by Dubai Shopping Festival 2012

Rising confidence on sales and profits is reported in most economic activities in Dubai for the first quarter 2012, according to the quarterly business confidence survey conducted by the Department of Economic Development (DED).

The composite Business Confidence Index (BCI) in the emirate rose by 16% to more than 133 points in the final quarter of 2011 compared to the previous quarter, mirroring an increasing optimism across key sectors, including among small and medium enterprises (SMEs) and exporting firms.

DED conducts the quarterly surveys to measure the perceptions of the business community and capture the outlook for the future. Key trends from the survey are collated into the Business Confidence Index, providing policy-makers, investors and businesses a scientific metric for forward planning.
“As an internationally reputed trading hub and investment destination it’s important for Dubai to monitor trends and provide the latest updates on business confidence and competitiveness. The quarterly business confidence survey is increasingly becoming a useful input for economic decision-making in Dubai,” commented His Excellency Sami Al Qamzi, Director-General of DED.
A total of 500 companies in Dubai, including SMEs, were covered in the last quarterly survey of 2011 conducted between October and December. Companies were asked to indicate if they anticipated an ‘increase,’ ‘decrease,’ or ‘no change’ in key indicators such as sales revenues, selling prices, volumes sold, profits and number of employees.

Over 67% of the survey participants said they expected an improvement in their sales in the first quarter of 2012, which is a 10 percentage points increase compared to Q4 of 2011. Moreover, while 39% of the companies said their profits are likely to remain stable, 44% saw Q1 2012 bringing higher profits.
Trade – the largest GDP contributor to Dubai – remained exceptionally upbeat during the Q4 of 2011, with retail sector looking forward to the Dubai Shopping Festival (DSF) promotions. DSF 2012, running from January 5 to February 5 appeared to have enlivened the travel, tourism, food & beverage, car rental, jewellery and textile businesses across the emirate with all these sectors expecting higher sales during the first quarter of 2012.

Transportation and logistics companies also see business soaring, largely on the back of higher cargo movements in order to respond to DSF demand.
With new projects set to start rolling in the UAE and contracts expected from other GCC countries, the construction sector foresees stability and in some cases marginal increase in sales revenues.

Plans for hiring and procurement are also being boosted by improving business confidence during Q4. Nearly 30% of the companies said they will increase the size of their workforce, as against 19% in Q3, with manufacturing and service firms expressing the strongest interest in hiring.
“Overall, a progressive build-up of dynamism and confidence is visible across key sectors. The year 2012 will by all means energise growth in Dubai,” said Al Qamzi.
The survey pointed to still insufficient demand for products and services, stiff competition, rising operating costs and fees, frequent changes in business regulations and delays in payments as the major challenges to local business operations.
Dubai being strongly integrated with global supply chains and trade, the impact of the unfavourable economic climate in the US and Europe as well as geopolitical tensions in the Middle East is also visible on sectors such as construction, logistics and transport.

Led by the global consultancy firm Dun & Bradstreet (D&B) the quarterly surveys adopts a scientific sampling approach ensuring adequate representation of small, medium, and large enterprises across the manufacturing, trading, and services sectors, while giving due attention to capturing the perceptions of the exporting firms in Dubai.

For further information on the surveys, please contact Laila Buabdulla, Head of Economic Information at DED, on +971 4 4455884.