DUBAI: A gauge of business conditions in Dubai has bounced back to the highest since the coronavirus pandemic dragged the economy into a downturn – but as weak demand still stands in the way of a recovery.
The IHS Markit Dubai Purchasing Managers’ Index rose to 46 in May from a record low 41.7 in April, remaining below the 50 mark that separates contraction from growth. Thanks to a relaxation of lockdown measures, output and new orders declined at a slower rate, while unemployment had the smallest drop in three months.
“The latest survey data suggested economic conditions remain a long way from recovery in May,” said David Owen, economist at IHS Markit. “Activity is expected to improve in the year ahead, but it remains to be seen how long it will take for the Dubai economy to rebound following COVID-19.”Unlike countries across the Middle East, the UAE – of which Dubai is a part – is so far not seeing signs of a possible resurgence of infections. But even as more companies reopen for business, Dubai may need longer to turn around an economy still suffering from disruptions to trade and travel and facing the likelihood that many expatriate workers could start to leave.
“Businesses highlighted that, despite restrictions on economic activity being partly lifted, weak consumer demand and a slow market response stopped them from making headway into covering their losses,” Owen said.