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Business conditions in Dubai last month improved at the fastest pace in three years, driven partly by travel, tourism and the construction sector.
The Middle East’s business hub saw a “robust speed of expansion” in its non-oil economy in June, according to a survey published by S&P Global on Wednesday. Its Dubai Purchasing Managers’ Index rose to 56.1 from 55.7 in May, the highest since June 2019 and well above the 50-mark that separates expansion from contraction.
“The Dubai PMI continued to trend upwards in June, reflecting further strength in new business and activity,” said David Owen, an economist at S&P Global. “That said, the economy also faced the challenge of rising inflationary pressures, which led to the quickest increase in input prices since the start of 2018.”
Although less intense than in other parts of the world, cost pressures are also on the rise in the oil-rich Gulf region, prompting countries including Saudi Arabia and the United Arab Emirates, of which Dubai is a part, to set aside billions of dollars to support low-income citizens and stockpile key commodities.
“The sharp uptick in global energy prices weighed heavily on businesses, with consumers also likely to feel the pinch on spending as fuel prices spike,” said Owen. “If cost inflation is sustained at a high level in the second half of 2022, it will become increasingly difficult for firms to keep price increases at bay.”
Dubai’s consumer price inflation rose to 4.7% in May, according to the latest data from the city’s statistics center. That’s the highest since 2016 at least, although companies continued to take on the burden of higher prices to combat strong market competition.
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