22/01/2012 08:02 AST
Business community in Dubai looks very optimistic for the first quarter of 2012 as majority of a recent survey respondent believes improvement in sales and more than 40 per cent expect higher profits.
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).
Consumer confidence is a major driver of sales in any economy in the world. The UAE claimed the second place spot for economic performance in a recent Forbes Middle East study, issued this month.
In January DED reported its consumer confidence index increased 15 points to 125, boosted by a 22 per cent rise in respondents’ optimism of an economic recovery over the next 12 months.
On Saturday, DED said the composite Business Confidence Index (BCI) in the emirate rose by 16 per cent 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.
“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,” DED director-general Sami Al Qamzi said in a statement.
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.
More than 67 per cent 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 last quarter of 2011. Moreover, while 39 per cent of the companies said their profits are likely to remain stable, 44 per cent saw first quarter of 2012 bringing higher profits.
Trade — the largest GDP contributor to Dubai — remained exceptionally upbeat during the fourth quarter 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 and 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 the last quarter of 2011. Nearly 30 per cent of the companies said they will increase the size of their workforce, as against 19 per cent in the third quarter, with manufacturing and service firms expressing the strongest interest in hiring.
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.
Khaleej Times
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