Dubai Business Survey - Q1 2021
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Dubai Business Survey – Q1 2021
INTRODUCTION The Department of Economic Development (DED) was established in March 1992, with the objective to organize, regulate and boost trade and industry within the Emirate of Dubai. In October 2008, HH Sheikh Mohammed bin Rashid Al Maktoum, UAE Vice President and Prime Minister, and Ruler of Dubai, issued Decree no. 25 giving full responsibility to DED to plan and regulate the overall economic performance of Dubai, supervise its functions and support the economic development to ensure that the objectives of the Dubai Strategic Plan are achieved. DED is responsible for its traditional activities of business registration, licensing and commercial protection in Dubai. However, with four new agency offices now under the umbrella of DED, the mandate has been extended to include: 1. Dubai SME 2. Dubai Exports 3. Dubai Investment Development Agency (Dubai FDI) 4. Dubai Competitiveness Office (DCO) In line with DED’s new mandate, the Economic Information Division conducts a quarterly Business Survey, in coordination with DED Agencies (Dubai Exports & Dubai SME) and in collaboration with NielsenIQ UAE to provide a timely and objective assessment of business expectations and performance. This document summarizes the main findings of the survey for the first quarter of 2021 (Q1, 2021). The Department of Economic Development (DED) is a Dubai Government entity that has the mandate to help achieve the key strategic objectives of fostering ‘Sustainable Economic Development’ and strengthening the ‘Competitiveness of Dubai’. In order to gauge the perceptions of the business community, DED conducts a quarterly business survey, to assess the level of current economic activity and the outlook of businesses for the next quarter. In addition, the survey elicits feedback from businesses on challenges that may impact growth and development and assesses their investment outlook for the coming twelve months. ded.ae
2
AT A GLANCE
▪ The coronavirus pandemic has impacted almost every sector of the emirate’s economy. However, the Dubai
government continues to take the necessary measures to tackle the spread of the virus and bring back
businesses to normal. As a result, Dubai is on a path of recovery and this can be witnessed from the overall
Business Confidence Index (BCI) which registered a reading of 125.6 points in Q1, 2021, a slight decline from
128.6 points in Q4, 2020. However, the index is in line with the score in Q4, 2019 thereby showing a sign of
stability in the expectations.
▪ Services sector holds the strongest outlook with a BCI score of 132.9 significantly higher from
manufacturing sector (119.5) and trading sector (117.6).
▪ Large companies have expressed a higher degree of confidence compared to SME’s with Overall BCI scores
of 129.6 and 119.6 respectively reflecting an optimistic mindset for business aspects such as selling price,
sales volume, profits, etc.
▪ Top 3 key challenges faced by Dubai firms include rent, competition and delayed payments.
▪ For business outlook, 47% of the firms expect the business situation to improve in the next quarter and
45% are expecting the situation to be stable, whereas only 8% of the firms expect the situation to
deteriorate in the next quarter.
▪ Nearly 50% of the firms indicated that the digital health solution helps retaining employees and 20% plan
to invest in the digital health solutions. On the employee’s perspectives, surveyed managers pointed out that
the majority of the employees are either not aware or are not looking forward to any digital well-being
solutions.
▪ Around 40% of the firms consider the digital solutions in the work place would build business confidence.
▪ Export oriented firms recorded a relatively stronger performance in Q1, 2021 and predicted a positive
outlook for Q2, 2021 compared to non-exporting firms.
▪ Firms are largely satisfied with Dubai Government’s economic stimulus package, lifting restrictions and
accelerating vaccination schedule to strive for quick recovery.
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IN FOCUS (1/2)
GAINING MOMENTUM FOR DUBAI BUSINESESS:
CATALYSTS TO DRIVE ECONOMY DURING 2021-2022
Over the past several decades, Dubai has been transformed into one of the world’s most prosperous and
booming economies. The emirate economic landscape has transformed from traditional and light manufacturing
activities to a different one lead by technological innovation. Like many other countries, the recent spread of
the coronavirus represented an unprecedented threat to the business community in Dubai.
▪ Firstly, the Dubai Government took an immediate, significant and decisive action to support businesses
facing hardship as a result of the COVID-19 outbreak. In January 2021, the Dubai Government launched an
economic stimulus package worth AED 315 million, raising the value of business incentives introduced by
the emirate’s government to AED 7.1 billion. The new package extends the validity of some of the initiatives
announced in the previous stimulus packages until June 2021. The package includes seven different
initiatives ranging from the exemption of paying market fees, freezing, reducing fees for tickets and
entertainment and facilitating procedures for renewal of licenses and reducing land rent.
▪ Secondly, the pace of the economic recovery in any country hinges on the pace of Covid19 vaccination. For
this reason, the UAE is currently ranked first in the Gulf region and second globally after Israel in terms of
those who are vaccinated. The longer the country remains unvaccinated, the greater the risk of newer strains
emerging that could potentially result in another cycle of infections and subsequent movement restrictions.
▪ Thirdly, some of the catalysts to drive Dubai economy are the cooperation between governments, large
manufacturers, the retail industry and consumers which will create sustainable consumption to push for
responsible growth that will be the key to recovery from the consequences of Covid-19 pandemic. Growth is
the only possible answer to help lift Dubai out of the coronavirus crisis and it is needed to mitigate the
consequences of the health crisis. The cooperation between the private and public the government is
witnessed in hosting the upcoming of Dubai Expo later this year.
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IN FOCUS (2/2)
GAINING MOMENTUM FOR BUSINESS IN DUBAI:
CATALYSTS TO DRIVE THE ECONOMY DURING 2021-2022
As a result of the previously mentioned policy responses by the Dubai government, the economic picture for the
emirate looks way better than it did a few weeks ago. The number of newly registered businesses has been
surging since April 2020.
Figure: 01
New Business Licenses in Dubai
7,000
6,000
5,000
4,000
3,000
2,000
1,000
0
Oct 2019
Nov 2019
Nov 2020
Apr 2019
May 2019
Apr 2020
May 2020
Oct 2020
Apr 2021
Feb 2019
Jul 2019
Aug 2019
Sep 2019
Dec 2019
Feb 2020
Jul 2020
Aug 2020
Sep 2020
Dec 2020
Feb 2021
Jan 2019
Mar 2019
Jun 2019
Jan 2020
Mar 2020
Jun 2020
Jan 2021
Mar 2021
▪ The information reported by the purchasing managers’ index number released by IHS Markit in April, 2021
which was constructed to gauge the level of business activity in the UAE sends promising signals to the
business community. The index is the highest since mid-2019, supported by a strong rise in new business
volumes and a sharp expansion in output that were linked to a continued economic recovery from COVID-19.
▪ It is worth noting that Dubai has the will, leadership and access to technology and resources to turn the
challenge posed by the coronavirus pandemic into a lever that can help its economy and activities become
vibrant, competitive, innovative and resilient.
▪ The Department of Economic Development will continue to press on with its economic strategies to ensure
that Dubai is in a good position for recovery once the COVID-19 situation stabilizes and to allow all Dubai
residents and businesses to seize the opportunities to redefine the emirate’s competitive edge.
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METHODOLOGY
The quarterly business survey for Q1, 2021 was conducted with a total sample of 510 companies across the
Emirate of Dubai. The sample included a mix of small, medium, and large enterprises and has adequate
representation from the Manufacturing, Trading, and Services sectors in proportion to their respective
value-added contribution to Dubai’s GDP. For elaboration on the methodology of calculating the BCI, please
refer to page 22 of this report.
Figure: 02
Survey Sample
Overall Sample 510 Large Companies 33
Manufacturing (SME)
Services (SME)
75
211 Manufacturing 8
33 Large Companies Trading 9
Services 16
191
Trading (SME)
In order to gauge the ‘business outlook’, the quarterly survey focuses on key indicators such as selling prices,
volumes sold, profits and number of employees. Respondents are asked to indicate if they expect an ‘increase’,
‘decrease’ or ‘no change’ in these parameters. The survey has captured perceptions of companies across various
sub-sectors.
1
For the purpose of the survey, each quarter is defined as follows: Q1 is the period between January and March, Q2 is the period between April and June, Q3 is the period
between July and September, and Q4 is the period between October and December of each year
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BUSINESS CONFIDENCE INDEX – Q1, 2021
Firms in Dubai appear to be less optimistic about their business outlook for the foreseeable future as compared
to Q4, 2020, with an Overall Business Confidence Index (BCI) decreasing by 3.0 points from 128.6 points in Q4,
2020 to 125.6 points in Q1, 2021. (a score of 100 indicates stable/neutral sentiments).
Figure: 03
Business Confidence Index – Q1, 2021
128.6
125.6 125.6
Q4, 2019 Q4, 2020 Q1, 2021
Figure: 04
Business Confidence Index – Q1, 2021
Large companies have Keynote
shown a higher degree of
confidence compared to Large companies have
SME’s and reflecting an expressed a higher
129.6 125.6
119.6 degree of confidence
optimistic mindset for
compared to SME’s with
business aspects such as
Overall BCI scores of
selling price, sales volume, 129.6 and 119.6
profits, etc. respectively.
SME Large Enterprise Overall Index
Index Index
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BUSINESS CONFIDENCE INDEX – Q1, 2021
Free zone firms in the primary sectors have a relatively higher level of optimism with respect to the business
outlook for 2021. Firms providing services such as logistics and maintenance are expecting a higher demand in
2021 compared to 2020.
Figure: 05
Business Confidence Index - Q1, 2021
Figure 5 shows a relatively high level of
confidence with respect to business
132.9 amongst services firms compared to
firms in manufacturing and trading
119.5 sector with BCI scores of 132.9, 119.5
117.6
and 117.6 respectively. Firms in trading
sector expressed the lowest level of
confidence by 15.3 points and 1.9 points
vis-a-vis services and manufacturing.
Manufacturing Services Trading
Figure: 06
Business Confidence Index – Q1, 2021
Firms in the Free zone have Keynote
displayed stronger 133.6 Managers in the key
122.8
projections as compared to service sectors such as
those in Dubai Mainland capital market, maritime,
with a difference of 10.8 real estate, retail and
points. transportation claimed to
have witnessed high
confidence in services
which reflects positive
Dubai Mainland Free Zone
expectations for growth in
2021.
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GLOBAL BUSINESS CONFIDENCE INDEX TRENDS
Key global markets have been selected due to their impact on Dubai’s economy. The data is sourced from
OECD Business Confidence Index which provides information on future developments, based upon opinion
surveys on developments in production, orders and stocks of finished goods in the industry sector. It can be
used to monitor output growth and to anticipate turning points in economic activity. Numbers above 100
suggest an increased confidence in near future business performance, and numbers below 100 indicate
pessimism towards future performance.
Figure: 07
Monthly BCI for Key Global Markets
BCI FOR DUBAI IS
125.6 IN Q1, 2021
105 102
103
102 102 103
101
100 102
101 102
100 100
99 99 99
95
90
85
Jan-20
Dec-20
Jan-21
Feb-20
Mar-20
May-20
Jul-20
Feb-21
Mar-21
Apr-20
Jun-20
Aug-20
Sep-20
Oct-20
Nov-20
Apr-21
China USA UK India Germany
Source: https://data.oecd.org/
■ Key global markets like the USA, the UK and Germany shows a strong path to recovery with monthly BCI
surging due to reopening of businesses, government relief plans and easing up of the restrictions. The United
Kingdom, the USA and Germany are also the top sources of visitors for Dubai and collectively around
107,000 tourist visited Dubai in Q1-2021 from these key global markets. Upward movement in the BCI for
these countries sends good signals to the tourism industry of the emirate.
■ Persistent BCI scores for China reflects the stability in the market, however, scores are still below 100 which
may reflect a slight pessimism towards the future performance. Stability in China is critical for Dubai’s
economy as Dubai is China’s most important trading partner.
■ Resurgence of COVID-19 in India has proven to be a massive blow for Dubai as the current ban of air travel
between Dubai and India have crippled the aviation & tourism sector. Indians were the top source of visitors,
as Dubai welcomed around 320,000 visitors from India in Q1-2021. Recovery of the Indian economy from
the second wave of COVID-19 is the most crucial aspect for the revival of Dubai’s economy and will help
strengthening bilateral relationship between the two nations.
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OVERALL BUSINESS OUTLOOK – Q2, 2021
Net balances across majority of the parameters have dropped in Q2, 2021 compared to Q1, 2021. However, the
optimism showed by business managers is mainly attributed to the government’s measures to inoculate the entire
population in order to accelerate the recovery process.
Outlook of Business Performance – Q2, 2021
Table: 01
Q1, 2020 Q1, 2021 Q2, 2021
No Net No Net No Net
Parameter Increase Decrease Increase Decrease Increase Decrease
Change Balance Change Balance Change Balance
Sales 66% 13% 21% 52% 62% 6% 15% 56% 53% 9% 23% 44%
Revenue
Selling
29% 8% 63% 9% 13% 9% 59% 4% 14% 9% 61% 5%
Prices
Volumes
66% 13% 21% 47% 54% 7% 17% 47% 45% 9% 22% 35%
Sold
No.of
23% 7% 70% 17% 23% 3% 63% 20% 20% 4% 65% 16%
Employees
Profits 62% 15% 23% 37% 47% 11% 22% 36% 36% 12% 32% 24%
New
Purchase 43% 8% 27% 41% 48% 4% 17% 44% 35% 6% 24% 29%
Orders
Note: Increase % + Decrease % + % No Change = 100%
Note : In an event it does not add up to 100%, the balance percentage is the Not Applicable figure.
■ Sales Revenue projections reflect a downtrend with net balance declining from 56%
in Q1, 2021 to 44% in Q2, 2021. Businesses cited various reasons including
Ramadan, visa restrictions, low customer footfall and slow recovery process behind
Keynote
the decline in expectation for sales revenue in Q2, 2021. With Ramadan around the
corner, fear of a second
■ Due to a struggling pickup in consumer demand, strict SOPs, and fear of a second wave of COVID-19 and
wave of COVID-19, projection for sales volumes has displayed a decline after y-o-y struggling demand, firms
have projected a slight
stability, with net balance falling from 47% in Q1, 2021 to 35% in Q2, 2021.
decline in the net balance
for key indicators in Q2,
■ In order to stay competitive and attract customers, the majority of the firms (61%) 2021.
plan to keep the selling prices unchanged in Q2, 2021.
■ With the hopes of pandemic to subside, 65% of the firms are expected to maintain
the current number of employees in Q2, 2021.
■ With Ramadan around the corner and struggling demand for goods and services,
firms are expecting a decline in new purchase orders (35%) with a net balance
falling from 44% in Q1, 2021 to 29% in Q2, 2021.
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SECTOR-WISE OUTLOOK FOR SALES VOLUMES
A comparison of expectations among key economic sectors indicates that the manufacturing sector holds the
strongest outlook for sales volume followed by services and the trading sector.
Figure: 08
Sectoral Net Balances (SalesVolume),
Quarterly Outlook – Q2, 2021
39% 37% 33%
Manufacturing Services Trading
MANUFACTURING SECTOR
Owing to a great deal of uncertainty caused by COVID-19 pandemic where firms are expecting a drastic change in
consumer behavior, Manufacturing sector predicted a further decline in the sales volume in Q2, 2021 compared
to Q1, 2021.
Figure: 09
Quarterly Net Balances (Sales Volume) Manufacturing Sector – Q2, 2021
35% 25% 57% 64% 47% 39%
Q2, 2019 Q3, 2019 Q4, 2019 Q1, 2020 Q1, 2021 Q2, 2021
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SERVICES SECTOR
Similar to the manufacturing sector, firms in services sector have registered a downtrend in the outlook for sales
volume with net balance declining from the past three quarters. The upcoming month of Ramadan and
uncertainty about border closures have been driving the outlook for tourism and hospitality sector down in Q2,
2021. The transportation & logistics sector on the other hand shows a stable Net Balance of 53% in Q2, 2021
mainly due to the resumption of international trade and gradual reopening of schools/institutions and actions by
businesses of cutting down on non-essential services.
Figure: 10
Quarterly Net Balance on Sales for Key Sectors – Q2, 2021
78%
50% 50% 54% 55% 57% 53% 67%
63%
37% 50%
12% 18%
-11%
TRANSPORTATION & LOGISTICS TOURISM & HOSPITALITY
57%
51% 48% 46%
37%
32% 30%
OVERALL SERVICES SECTOR
Expectations among key services reveal that tourism and hospitality (hotels and restaurants, travel and car
rentals) declined from 50% in Q1, 2021 to 18% in Q2, 2021 the transportation and logistics sector is
expected to be stable.
TRADING SECTOR
Due to limited opening hours, SOP implementation and fewer tourists visiting Dubai during Ramadan season, the
trading sector has also displayed a weaker outlook for sales volumes, with net balance on a downward trend,
decreasing from 50% in Q1, 2021 to 33% in Q2, 2021.
Figure: 11
Quarterly Net Balances (Sales Volume) for the Trading Sector – Q2, 2021
29% 36% 50% 57% 50% 33%
Q2, 2019 Q3, 2019 Q4, 2019 Q1, 2020 Q1, 2021 Q2, 2021
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BUSINESS
8
SITUATION OUTLOOK
The proportion of firms anticipating improvement in business situation has decreased from 52% in Q1, 2020 to
47% in Q2, 2021. Firms expecting more stability (45%) in Q2, 2021 compared to (43%) in Q1, 2021 while the
share of firms foreseeing deterioration increased from 5% in Q1, 2021 to 8% in Q2, 2021.
Figure: 12
Outlook of Business Situation – Q2, 2021
45%
47%
8%
Improvement Stability Deterioration
The percentage of firms that are planning to export new products/services for the first time in the next quarter
remains unchanged at 8% when compared to Q1, 2021. 8% of the firms aim to export to new
products/services for the first time. Top markets with respect to plans for export diversification are the GCC,
African and other Arab countries.
PLANS TO OPERATE DIGITALLY IN 2021
According to the survey, 19% of the firms shifted more than 50% of their operations to digital solutions during
the pandemic. The transformation was made easy because of the well-built digital infrastructure.
Figure: 13
% of Firms Moved Online during COVID-19
25%
16%
40%
19%
Above 50% 21%-50% 0% - 20% Not Applicable
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DIGITAL
8
SCENARIO OF FIRMS IN DUBAI
Time spent on digital mediums seems to have either increased or remained unchanged among firms in Dubai.
Firms in the services sector have spent more time on digital mediums during COVID-19 compared to firms in
trading and manufacturing sector.
Figure: 14
Time Spent on Digital Mediums During COVID-19
50%
49%
1%
Increased No Change Decreased
IMPORTANCE OF DIGITAL HEALTH SOLUTIONS
Nearly 50% of the firms cited that the digital health solution helps in retaining employees. Despite that, only
20% of the firms surveyed are planning to invest in digital health solutions. Firms claimed that majority of their
employees are either not aware or are not looking forward to any digital well-being solutions. Around 40% of
the firms consider the digital solutions in the work place are essential to building the business confidence.
Figure: 15
Digital Health Solutions Understanding
21% 31% 33%
27% 37%
48%
52% 30%
20%
Digital health solution help Plan to invest in digital health Are employees looking forward
retain employees solutions to digital well-being solutions
Yes No Don’t Know
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DUBAI SME OUTLOOK – Q2, 2021
Since more than 99% of the firms in Dubai are SME’s, out of the 510 firms being interviewed, 93% are SME’s.
These include micro, small and medium enterprises as per DED’s SME definition. The Overall BCI for SME's
dropped to 119.6 points in Q1, 2021 compared to 126.8 in Q4, 2020 with SME businesses anticipating lesser
sales revenue, volumes, profits and new purchase orders compared to their expectations for Q1, 2021.
Outlook of Business Performance (SME's) – Q2,2021
Table: 02
Q1, 2020 Q1, 2021 Q2, 2021
No Net No Net No Net
Parameter Increase Decrease Increase Decrease Increase Decrease
Change Balance Change Balance Change Balance
Sales 67% 13% 20% 54% 62% 6% 15% 56% 53% 9% 23% 43%
Revenue
Selling
30% 8% 62% 22% 14% 9% 59% 4% 14% 10% 61% 5%
Prices
Volumes
67% 12% 21% 55% 55% 7% 17% 48% 44% 10% 23% 34%
Sold
No.of
23% 6% 71% 17% 23% 4% 64% 19% 19% 4% 66% 16%
Employees
Profits 63% 16% 21% 47% 47% 11% 21% 36% 36% 12% 32% 24%
New
Purchase 43% 8% 26% 35% 47% 4% 17% 43% 35% 7% 24% 28%
Orders
Note : In an event it does not add up to 100%, the balance percentage is the Not Applicable figure.
Note : Increase % + Decrease % + % No Change = 100%
■ Annual comparison of survey results indicates that SME's outlook for Q2, 2021
is on a decline for sales revenue, volume, profits, purchase orders and hiring. Keynote
This is attributed to the upcoming month of Ramadan and reduced operating SME’s outlook is on a
hours for businesses. decline especially for sales
revenue, profits, volume,
■ Sales Volume registers a q-o-q decline, with net balance decreasing from 48% and purchase orders.
In Q1, 2021 to 34% in Q2, 2021. Reduced timings in Ramadan, off season for
tourists and COVID-19 crises are they key pain points for the decline in COVID-19 crises and
expectations for sales volume in Q2, 2021. Ramadan causing limited
working hours and
reduced inflow of tourists.
■ Profits reflect a q-o-q decline, with net balance decreasing from 36% in Q1,
2021 to 24% in Q2, 2021. Firms are expecting to reduce the profit margins in
order to sustain in the market with lesser demand for products and services.
■ Proportion of SME's anticipating improvement in business situation has
decreased from 47% in Q1, 2021 compared to 41% in Q2, 2021, while the
proportion of firms expecting a stable outlook scores 39%. Additionally, only
7% of firms expect the business situation to deteriorate.
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DUBAI EXPORTERS OUTLOOK –Q2, 2021
The survey includes 50 export-oriented manufacturing, trading, and services firms in Dubai. For the purpose of
this report, an exporter is defined as an entity with export sales accounting for 20% or more of its consolidated
sales. Business expectations among exporters have declined on an annual basis, registering a BCI score of 123.1
in Q1, 2021 down from 125.6 points in Q4, 2020. This is mainly attributed to an expected decline in volumes
and sales of exports in Q2, 2021.
Outlook of Business Performance (Exporters) – Q2, 2021
Table: 03
Q1, 2020 Q1, 2021 Q2, 2021
No Net No Net No Net
Parameter Increase Decrease Increase Decrease Increase Decrease
Change Balance Change Balance Change Balance
Sales 71% 12% 17% 59% 68% 8% 13% 61% 58% 14% 22% 44%
Revenue
Selling
30% 7% 63% 23% 11% 11% 58% 0% 28% 6% 60% 22%
Prices
Volumes
71% 12% 17% 59% 71% 11% 8% 61% 44% 14% 20% 30%
Sold
No.of
16% 4% 80% 12% 26% 3% 63% 24% 30% 4% 54% 26%
Employees
Profits 65% 16% 19% 49% 39% 18% 24% 21% 34% 16% 40% 18%
New
Purchase 45% 4% 25% 41% 55% 11% 18% 45% 46% 10% 26% 36%
Orders
Export 64% 9% 26% 55% 66% 5% 22% 61% 46% 6% 30% 40%
Sales
Note: Increase % + Decrease % + % No Change = 100%
Note : In an event it does not add up to 100%, the balance percentage is the Not Applicable figure.
■ Exporters’ outlook has further weakened in Q2, 2021 on majority of the
indicators especially volumes sold, profits and export sales. However, some Keynote
exporters are expecting an increase in prices due to exorbitant prices of raw
Business expectations among
materials and cost of transport and increased demand for their products.
exporters have declined on a
quarterly basis, registering a
■ Non-exporters are more optimistic with an overall BCI of 125.6 compared to BCI score of 123.1 in Q1,
123.1 for exporters. 2021 down from 125.6
points in Q4, 2020, mainly
■ Net balance on export sales dropped in Q2, 2021 compared to Q1, 2021, due to an expected decline in
where higher number of firms expecting a decrease in the export sales in Q2, volumes sold, profits and
2021. With mixed sentiments regarding the recovery of the markets, export sales in Q2, 2021.
exporters are foreseeing border restrictions and change in custom regulations
to hinder export sales in the future.
■ While exporters are not very optimistic on majority of the parameters in Q2,
2021 compared to Q1, 2021, net balance for number of employees reflects an
upward trend with 30% of the exporting firms expects to increase the
number of employees in Q2, 2021.
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OVERALL BUSINESS PERFORMANCE – Q1, 2021
With the objective of understanding the business outlook for the future, the survey also helps gauge the actual
change in performance of businesses on a quarterly basis as depicted in the below table:
Overall Business Performance – Q1,2021
Table: 04
Q4, 2019 Q4, 2020 Q1, 2021
No Net No Net No Net
Parameter Increase Decrease Increase Decrease Increase Decrease
Change Balance Change Balance Change Balance
Sales 27% 41% 32% -14% 25% 55% 16% -30% 22% 50% 27% -28%
Revenue
Selling
12% 31% 57% -19% 6% 46% 42% -40% 9% 41% 45% -32%
Prices
Volumes
27% 40% 33% -13% 19% 52% 19% -33% 19% 42% 29% -23%
Sold
Profits 23% 49% 28% -26% 13% 67% 18% -54% 12% 56% 29% -44%
No.of
Employees 14% 11% 75% 3% 5% 31% 62% -25% 9% 22% 69% -14%
New
Purchase 22% 23% 33% -1% 20% 36% 28% -16% 19% 31% 31% -11%
Orders
Note: Increase % + Decrease % + % No Change = 100%
Note : In an event it does not add up to 100%, the balance percentage is the Not Applicable figure.
■ With respect to all indicators such as sales revenue, prices, volume sold,
profits, number of employees and new purchase orders, the net balance has
improved in Q1, 2021 compared to Q4, 2020. Improvement is mainly driven Keynote
by inflow of tourists, reopening of restaurants and slight improvement in When it comes to actual
demand for products and services. performance of
businesses, net balance on
■ Although the net balance for selling prices improved in Q1, 2021 compared all the indicators has
to Q4, 2020, owing to the cut-throat competition and lower demand, still a improved in Q1, 2021
huge number of firms reduced their selling prices to survive during the compared to Q4, 2020.
COVID-19 pandemic time by attracting more customers through discounts
and promotions.
■ After conducting massive layoffs, furloughing the staff and salary reductions
in Q4, 2020, the situation has improved in Q1, 2021 where the net balance
of the number of employees has picked-up.
■ Net balance on profits has improved in Q1, 2021 (-44%) compared to Q4,
2020 (-54%). However, the majority of firms still experiencing a decline in
profits in Q1, 2021.
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BUSINESS PERFORMANCE FOR KEY
SECTORS – Q1, 2021
Sales volume for all the sectors is still facing a massive decline in Q1, 2021. Travel and Tourism, followed by
Advertising/Marketing and Financial Services sectors are the most affected due to a decline in sales volume caused
by COVID-19 pandemic.
Figure: 16
Net Balances on Sales Volume for Key Sectors – Q1, 2021
-4%
-7%
-9%
-11%
-20% -20% -20%
-22%
-26%
-30%
-40%
-50%
Trading Manufacturing Construction & Contracting Document & Printing Services
Financial Services Consultancy Services Travel & Tousim Wholesale & Retail
Maintenance Services Real Estate Advertising/Marketing Services Logistics
■ Owing to the fear of a second wave of COVID-19 which will result in an
uncertainty of air traveling, the tourism industry is expected to take a
massive blow.
Keynote
■ Sectors with major negative impacts amidst the COVID-19 pandemic are Although the massive decline is
mainly Travel and Tourism (-50%) Advertising/Marketing (-40%) evident amongst all the key
followed by Financial Services (-30%), Manufacturing (-26%), sectors but the business
Consultancy Services (-22%), Wholesale and Retail (-20%) and Trading situation has improved in Q1,
(-20%). 2021 compared to Q4, 2020
especially in the manufacturing
and logistics sector.
■ Although there is a decline in net balance of sales volume for all the
sectors, the manufacturing sector registered an improvement in the net
balance from -41% in Q4, 2020 to -26% in Q1, 2021. The logistics
sector has also recorded a significant improvement from -47% in Q4,
2020 to -7% in Q1, 2021.
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SME's PERFORMANCE – Q1, 2021
Overall Business Performance (SME's) – Q1, 2021
Table: 05
Q4, 2019 Q4, 2020 Q1, 2021
No Net No Net No Net
Parameter Increase Decrease Increase Decrease Increase Decrease
Change Balance Change Balance Change Balance
Sales 26% 41% 33% -15% 24% 57% 16% -33% 22% 50% 28% -29%
Revenue
Selling
11% 33% 56% -22% 5% 48% 40% -42% 9% 42% 46% -33%
Prices
Volumes
26% 41% 33% -15% 18% 53% 19% -35% 18% 43% 31% -25%
Sold
No.of
14% 12% 74% 2% 6% 30% 63% -24% 7% 22% 70% -15%
Employees
Profits 22% 50% 28% -28% 12% 67% 17% -55% 11% 57% 30% -45%
New
Purchase 22% 23% 32% -1% 20% 37% 27% -17% 18% 31% 32% -14%
Orders
Note: Increase % + Decrease % + % No Change = 100%
Note : In an event it does not add up to 100%, the balance percentage is the Not Applicable figure.
■ In Q1, 2021, improvement is witnessed across all parameters vis-à-vis Q4,
2020 especially on volumes sold, the number of employees and profits. Keynote
Although there is negative net
■ The percentage of SME’s reporting their current business situation in Q1, balance on across all the
2021 as ‘Good‘(14%), ‘Average’ (60%) and ‘Poor’ (25%). parameters, SME’s performance
has improved in Q1, 2021
■ Large enterprises have performed better than SME’s across all the compared to Q4, 2020.
parameters which is also in line with the overall confidence index where
large enterprises have significantly higher BCI of 129.6 compared to the SMS’s performance is on the
SMEs score of 119.6. right track with net balance
significantly improving especially
■ SME’s in Dubai are facing numerous challenges which includes plummeting on volumes sold, the number of
demand for products and services, government fees, cost of rentals and employees and profits in Q1,
utilities, COVID-19 testing cost and challenging market conditions. 2021.
Therefore, SMEs are seeking a financial support from the government for
their survival during these unprecedented times.
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EXPORTERS PERFORMANCE – Q1, 2021
Overall Business Performance (Exporters) – Q1, 2021
Table: 06
Q4, 2019 Q4, 2020 Q1, 2021
No Net No Net No Net
Parameter Increase Decrease Increase Decrease Increase Decrease
Change Balance Change Balance Change Balance
Sales 36% 38% 26% -2% 37% 47% 13% -11% 34% 42% 24% -8%
Revenue
Selling
12% 33% 55% -21% 16% 29% 53% -13% 26% 38% 36% -12%
Prices
Volumes
36% 37% 27% -1% 21% 47% 24% -26% 38% 30% 22% 8%
Sold
No.of
13% 10% 77% 3% 11% 16% 68% -5% 16% 18% 64% -2%
Employees
Profits 29% 47% 24% -18% 21% 50% 24% -29% 20% 50% 24% -30%
New
Purchase 28% 16% 30% 12% 39% 26% 26% 13% 40% 28% 26% 12%
Orders
Export 64% 9% 26% 55% 18% 37% 42% -18% 22% 30% 46% -8%
Sales
Note: Increase % + Decrease % + % No Change = 100%
Note : In an event it does not add up to 100%, the balance percentage is the Not Applicable figure.
Keynote
■ Quarterly data reported in table (6) shows that exporters performed better in
Q1, 2021 with improvement of the net balance for the majority of the Survey results indicate that
parameters. export-oriented firms
performed better than non-
■ Volumes sold recorded the highest increase from -26% in Q4, 2020 to +8% in exporting firms for all
Q1, 2021. The majority of the export-oriented firms experienced an increase in parameters.
demand for their products right after the markets reopened and lockdown was
over.
■ GCC, Africa and India are the top export markets in Q1, 2021.
■ Exporters reported better performance than non-exporting firms for all
parameters.
■ Custom regulations, border restrictions and lower demand in other countries
stemming from COVID-19 have affected the performance of export-oriented
firms in Q1, 2021.
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KEY BUSINESS CHALLENGES IN DUBAI
Figure: 17 Figure: 18
Key Business Challenges – Q4, 2020 Key Business Challenges, Q1, 2021
Rent
49% Rent 38%
Uncertainity about economic conditions 32% Competition 28%
License fees 30% Delayed Payments 27%
Delayed Payments 29% 25%
Uncertainity about economic conditions
Competition 22%
License fees 23%
Others*
13%
Global economic conditions 18%
Taxes and customs duties 11%
Cost of services 13%
Insufficient demand 10%
Insufficient demand 12%
Government rules & regulations 10%
Cost of rawmaterials 9%
Cost of services 9%
Government rules & regulations 7%
No Negative Factor 7%
Taxes and customs duties 6%
Global economic conditions 6%
Funding constraints 5%
Funding constraints 6%
4% Tourism / Travel restrictions 5%
Cost of rawmaterials
Employment Laws 2% No Negative Factor 4%
Laws of commerce 1% COVID-19 4%
*Others include challenges related to COVID-19, delay in payments, fines,
credit terms, travel restrictions and visa issues
Major challenges facing Dubai’s business community as follows:
■ Rent: Rent is still considered the biggest hindering factor in Q1, 2021 (38%) which was also the paramount
issue in Q4, 2020. This could be attributed to the current market conditions where consumer demand has
plummeted and firms are facing significant cash flow constraints with the rental expenses being the biggest
cost contributor, especially in the trading sector.
■ Competition: 28% of the firms consider competition as one of the key challenges in Q1, 2021 and they
claimed that competition drove them to reduce the prices in order to remain competitive.
■ Delayed payments: 27% of firms reported delayed payments as being one of the key business challenges in
Q1, 2021. Firms experienced huge payment delays from various stakeholders which lead to a massive rift in
cash flows.
■ Uncertainty about economic conditions: With borders reopening, rapid vaccinations and revamped global
travel policies, uncertainty about economic conditions has dropped from 2nd biggest hindering factor at 32%
in Q4, 2020 to the 4th biggest hindering factor in Q1, 2021 (25%).
■ License fees: Only 23% of the Dubai firms considered license fees as a key challenge as opposed to 30% in
Q4, 2020. While Dubai government’s initiatives have been helping firms stay in business. However, there are
still some firms that require financial support from government in order to survive in these unprecedented
times.
■ Global economic conditions: Since Dubai is dependent on other countries for tourism and trade, 18% of the
firms consider the global economic conditions deterioration to be a key challenge in Q1, 2021.
■ The remaining challenges each affected 13% or fewer of the surveyed firms.
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INVESTMENT OUTLOOK
The survey gauges the business community’s investment outlook over a twelve-month horizon.
Figure: 19
In the coming 12months, do you Plan to
Expand the Capacity of your Firm?
30% 44%
49%
70% 51% 56%
Q4, 2019 Q4, 2020 Q1, 2021
No Yes
Note: Plans for capacity expansion includes technology upgradation, headquarter expansion and opening of
new branches.
■ In the coming 12 months, around 44% of the firms plan to expand their capacity compared to 50% in Q4,
2020.
■ Sector with highest proportion of firms planning to expand the capacity is services (48%) followed by trading
(43%) and manufacturing (39%).
■ Large enterprises are more inclined towards expanding the capacity in the coming 12 months with 73%
whereas only 42% of SMEs are planning to expand the capacity.
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BUSINESS CONFIDENCE INDEX CALCULATIONS
The Business Confidence Index (BCI) is calculated as a weighted average score of the following ‘business
outlook’ indicators:
■ Selling Prices
■ Volumes Sold
■ Number of Employees
■ Profits
For each indicator, ‘resulting scores’ are calculated using the net balance method:
(% of positive responses - % of negative responses) + 100
For the Overall Business Confidence Index, the resulting scores are multiplied with their corresponding weights
to arrive at a weighted average Index score. This index is finally rebased Q2, 2011 = 100. Taking account of the
economy’s composition by firm size, the index is weighted by the relative contributions of SME's and large
businesses to Dubai’s GDP. The final result is the following index calculation: Overall Index = 60% * (Large
Company Index) + 40% * (SME Index).
BCI scores are classified in the following three groups:
■ BCI < 100, business expectations are negative
■ BCI = 100, business expectations are stable
■ BCI > 100, business expectations are positive
When expressed with reference to the base quarter Q2-2011, the following interpretations hold (t and t-1
referring to two consecutive quarters):
■ BCI(t)< BCI(t-1): business expectations are declining
■ BCI(t) =BCI(t-1): business expectations are stable
■ BCI(t)> BCI(t-1): business expectations are rising
2
Weighted Average BCI = [(Net Balance on Selling Prices) x (Parameter Weight)] + [(Net Balance on Volumes Sold) x (Parameter Weight)] + [(Net Balance on No. of employees) x
(Parameter Weight)] + [(Net Balance on Profits) x (Parameter Weight)]
ded.aeEconomic Information Division
Economic Studies & Policy Sector
P.O.Box: 13223, Dubai, United Arab Emirates
Tel: +9714 445 5555 | Dir: +9714 445 5881 | Dir: +9714 445 5884 | Fax: +9714 445 5830
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