The United Arab Emirates registered strong growth in private sector production, purchasing and employment during January, according to HSBC‘s monthly Purchasing Managers Index (PMI), compiled by Markit, a global financial information and services company. Experts predict a slowing in some economic activity during this year as a result of lower oil prices, however January’s index showed a three-month high.
The HSBC UAE Purchasing Managers’ Index™ (PMI) increased to 59.3 in January, up from 58.4 in the month of December and representing a three-month high for the Emirates. The PMI is a seasonally adjusted composite indicator designed to provide a single-figure snapshot of operating conditions in the non-oil private sector economy.
According to HSBC, almost 37% of panellists polled in the UAE reported higher production in comparison to the previous month, with good market conditions, the startup of new projects and stronger sales growth reported as the main factors driving production. Overall growth was also driven by further rises in new orders from both the domestic and international markets, with overseas orders reaching a five-month high.
The International Monetary Fund lowered its economic growth projection for the UAE in 2015 last month, citing lower oil production. However, the IMF was careful to point out that the UAE’s non-oil economy will continue to grow. The emirates of Dubai and Sharjah both have well diversified economies, whilst 48 percent of Abu Dhabi’s total gross domestic product (GDP) is now non-oil related.
Sharjah’s economy, in particular, is unique in the GCC, with no single sector contributing more than 20 percent of its GDP. The government of Sharjah recently announced the highest annual budget in its history for 2015, with 45 percent of the record budget earmarked for economic development, increasing its spend in that area by 22 percent compared to last year.
Source: HSBC, IMF, Shurooq