Dubai Growth Buoyed by Tourism Even as Omicron Clouds Outlook
Dubai’s business conditions accelerated last month as easing travel restrictions and the Expo 2020 exhibition helped boost the city’s key tourism industry, before a renewed surge in coronavirus cases.
IHS Markit’s Purchasing Managers’ Index for the Middle East’s main business hub jumped to 55.3 in December from 54.5 in November, staying above the 50 mark that separates growth from contraction, and hitting the highest level since June 2019. Employment also jumped in one of the strongest expansions since the start of the pandemic.
Still, businesses continued to battle higher costs, with input price inflation accelerating to the highest since March. And uncertainty about the pandemic, as the omicron variant started to take hold late last month, meant firms were less optimistic about 2022, with just over 12% confident of growth this year.
Before the omicron strain emerged, the United Arab Emirates had managed to keep cases under control for most of 2021. Infections in the country, of which Dubai is a part, rose above 2,000 for the first time in six months in December.
- Firms were concerned with how omicron would impact new business and travel
- Companies cited improvement in local sales with consumer confidence growing
- Travel and tourism led sales growth followed by wholesale and retail
- Output in non-oil economy increased at a sharp pace
- Higher raw materials prices often discouraged buying activity and firms also noted increased energy prices
- Average prices charged by non-oil business dropped for a sixth straight month, but the pace of decline had slowed
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