Dubai Economy Tracker: Steeper price discounting drives activity and new order growth in April

The headline Dubai Economy Tracker (DET) Index rose to 57.9 in April from 57.6 in March.  While this is the highest reading since February 2015, it reflects sharp growth in new work and output – both reflecting the volume of activity in April.  Just as important, but not included in the headline index, is the extent of price discounting which was the fastest since November 2018.  Selling prices declined even as input costs were slightly higher, squeezing profit margins.  On average, selling prices have declined every month for the last year.   

Employment was broadly unchanged in April, despite the 4-year high in the headline DET index.  The average employment index for the year to April is just below the neutral 50.0 level, signalling a marginal decline in jobs in Dubai’s private sector this year, which reflects the challenging environment businesses are facing and their desire to keep costs down, despite rising volumes of output.    

Firms in Dubai were the most optimistic they have ever been about their future output, with nearly 85% of firms surveyed expecting their output to be higher next April, and none anticipating a decline in output.  This is not surprising given that 2020 is the Expo year, with both domestic demand and tourism expected to be firmer.  The future output index is likely to remain elevated through the course of this year. 

DET index rises to four-year high in April

Source: IHS Markit, Emirates NBD Research

April sector survey highlights:

• Wholesale & retail trade sector index rises in April
• Travel & tourism sector growth moderates
• Construction sector new work recovers in April

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