Non-oil private sector business activity in Dubai was subject to the strongest improvement in nearly two years in January, according to a key monthly survey.
The Emirates NBD Dubai Economy Tracker Index, a measure of the emirate’s economic health, was boosted by a rise in travel and tourism amid signs of a rebound in the industry even as a strong US dollar put off some visitors.
The measure, produced by Dubai’s biggest bank by assets, rose to 57.1 in January from 55.9 in December, the fastest rate of improvement in 23 months.
A reading above 50 indicates that the non-oil economy is growing, while a reading below 50 suggests that it is contracting. The number of tourists visiting Dubai grew by 5 per cent last year despite demonetisation in India, an economic slowdown in Saudi Arabia and the referendum in the UK to leave the EU hitting its three biggest source markets, according to a report from the Dubai tourism authority this week.
However, the figures fell flat on Dubai’s previously stated ambitions to grow at an annual rate of between 7 and 9 per cent and leaves the emirate needing to expand its tourist inflow by nearly a third over the next three years to achieve its target of 20 million visitors by Expo 2020.
And tourist numbers to Dubai from countries with weak currencies, including Nigeria and Egypt, dropped significantly last year. After travel and tourism, the best performing categories were wholesale and retail and construction.
As well as getting a bump from new orders, much of the gains, however, came on the back of price discounting to attract buyers and job creation still remained modest, according to the bank.
“The rise in the Dubai Economy Tracker index in January to its highest level in nearly two years was mainly due to faster expansion in output and new orders,” said Khatija Haque, head of Middle East and North Africa research at Emirates NBD.
“While some of the improvement was attributed to new projects, price discounting is still playing a significant part in supporting demand.”