Business conditions in the United Arab Emirates worsened for the first time since 2009, ending a decade of expansion after a debt crisis brought Dubai to the brink of default.
Hurt by employment losses and a drop in new orders, operating conditions in the second-biggest Arab economy deteriorated in January, according to IHS Markit. Its U.A.E. Purchasing Managers’ Index, a snapshot of the country’s non-oil private sector, dropped to 49.3, crossing the threshold of 50 that separates contraction from growth.
“Key to the decline were firms’ efforts to reduce employment at one of the fastest rates on record in order to streamline costs,” David Owen, economist at IHS Markit, said in a statement on Tuesday.
- Total new orders in the U.A.E. fell in January for the second time in three months
- Output didn’t grow for the first time in 10 years, according to IHS Markit
- Selling prices were reduced for the 16th month
- On a positive note, new orders from abroad grew for a third straight month
The federation of seven emirates, dominated by oil-rich Abu Dhabi and tourism and trade hub Dubai, is losing economic momentum in the face of challenges that range from geopolitical strains in the region to weak domestic demand. Authorities are counting on Dubai’s World Expo exhibition later this year to revive growth.
