Emirates NBD Research forecasts 4.0% real GDP growth for Dubai in 2024, in line with its estimate for last year. 

 

“Input price pressures eased to a five-month low in December, enabling firms to discount at the most aggressive rate since June as they looked to remain competitive. In this strong order environment, business optimism picked up once more after a dip in November, and firms increased hiring in order to cope with the uptick in demand,” according to Daniel Richards, Senior Economist, Emirates NBD Research.

 

Meanwhile, the S&P Global Dubai PMI (purchasing managers’ index) survey ticked up to 57.7 in December, which marked a meaningful acceleration on the 56.8 recorded in November, a seven-month low for the index. 

 

Robust private sector expansion

Indeed, the December reading was the strongest performance for the Dubai PMI in 16 months, with all three individual sectors covered by the index remaining strongly above the neutral 50.0 level, indicating a robust expansion in the private sector, he says. 

 

The year ended strongly, with the Q4 average the strongest since pre-pandemic Q2 2019, and researchers estimate real GDP growth of 4.0% last year, down only modestly on the 4.4% recorded in 2022.

 

The outlook over the coming months remains positive also, with new order growth at the highest level since mid-2019, boding well for the pipeline of activity through the start of 2024 at least. 

 

Travel & Tourism

Travel & tourism ticked up modestly in December, but it was not the driver of the improvement in the headline reading, and this marked the second month that the sector was not the best-performing. While output remained well above the neutral level, it slowed to the lowest level since the previous December. With new orders picking up from November, activity could accelerate once more in the coming months. 

 

Firms continued to discount aggressively in order to attract business, with selling prices falling at the fastest pace since January 2022. Business optimism picked up from November but remains off October’s elevated levels, and while firms did continue to increase staff count, this was at a slower pace. Tourism and the aviation sector have been key drivers of growth in Dubai over recent quarters, and while base effects (most reopening gains have now been realised) and global slowdown pressures will see this soften, we still expect it to provide a meaningful contribution to GDP growth in 2024.

 

Construction

The construction sector’s PMI picked up in December after November’s dip, and it was broadly in line with the average over the year. Output accelerated and new work expanded at a faster pace, and this drove an improvement in business confidence compared with November’s nine-month low, albeit still lower than levels seen earlier in the year. Input price pressures softened, enabling firms to discount more aggressively, cutting prices for the fourth month running.

 

Wholesale & retail

The wholesale & retail sector saw a material rise in its sector PMI reading in December as it came in at 58.3, up from 56.9 in November. This was driven largely by improvements in new orders which saw a meaningful acceleration and hiring, which expanded at the fastest pace since September. Output grew at a softer pace in December but continues to indicate robust growth in activity. Input prices softened, enabling firms to cut prices at a faster pace.--TradeArabia News Service