Dubai Economy Tracker eases off 2-year high

The Emirates NBD Dubai Economy Tracker Index (DETI) declined to 55.0 in May from a 26-month high of 57.7 in April.  The survey pointed to strong but slower growth in Dubai’s economy last month, which is consistent with the UAE and Saudi Arabia PMI surveys for May.  Output (58.0) and new work (59.0) were both lower m/m but the May readings still signaled a strong expansion in business activity and new orders.  Firms surveyed indicated that more projects, particularly in the construction sector, had boosted business activity in May.

Employment (50.7) rose slightly in May, but the overall rate of job growth remains weak in the context of strong rises in output and new orders.  Input costs were close to unchanged last month as were selling prices.  The latter is particularly encouraging after seven months of price discounting. Firms remained strongly optimistic about their prospects over the next 12 months, with the business expectations index rising to 71.3 in May.    

The Dubai Economy Tracker Index is a good proxy indicator for Dubai’s real GDP growth.  Our analysis shows that the correlation between the average quarterly reading for the DETI and official real GDP growth in Dubai is 68%.  The rise in the DETI year-to-date provides support for our view that Dubai’s economic growth is likely to accelerate this year.  

Highlights:

• Construction sector outperforms in May
• Wholesale and retail trade index declines to 55.5 in May
• Travel and tourism sector growth slows in May

Click here to download the full report.