General Index reflects optimism about economy in Abu Dhabi

The general index of confidence in the business climate in the Emirate of Abu Dhabi maintained its level during the first quarter of 2015 compared to the fourth quarter of 2014, with 61 and 63 respectively as a reflection of the results of both the current situation index and the future situation index with 56 and 64 respectively during the first quarter of 2015.

The directions of the general index of confidence in the business climate and its sub-indexes issued by the Studies Division of the Department of Economic Development, in collaboration with the Statistics Centre - Abu Dhabi during the first quarter of 2015 showed a disparity in the evaluation of businesses-operating in all economic activities, except the commercial activity - to the current economic conditions compared to the last quarter of 2014, while their future prospects were adequal.

This disparity comes because of the uncertainty of businesses amid concerns associated with trends of the economic performance in oil-exporting countries due to fluctuations in world oil markets, despite the good performance of many non-oil sectors in the Emirate of Abu Dhabi's economy.

It is expected that the good financial conditions in the Emirate, as reflected in the credit quality classification (+AA) according to Standard & Poor's Agency, contribute in the promotion of confidence in the Emirate's economy, as Standard & Poor's Agency excluded the impact of the fluctuations in oil prices on development projects in Abu Dhabi.

Abu Dhabi Business Centre exerts continuous efforts to improve the business environment and investment climate in the Emirate by improving the services provided to businessmen and investors: The Centre recently announced reducing the average number of procedures for the issuance of commercial licenses by 50%, the number of days necessary to start a business by 50% and the average cost of issuing commercial licenses by 30%, and it is currently working on completing the common system for the issuance of various commercial licenses in Abu Dhabi by next year.

The Government of the Emirate of Abu Dhabi, moving forward in its efforts to strengthen domestic demand, through the continued implementation of capital projects in various sectors with a value of 330 billion dirhams during the period (2013-2017), can contribute in enhancing the confidence of businesses in the business climate and economic conditions in the Emirate.

Abu Dhabi Business Centre issued during the first quarter of 2015 about 2452 new commercial licenses, reflecting the continued establishment of businesses in light of the attractive business environment and investment climate in the Emirate.

The establishments operating in various economic activities expressed optimism about their internal situation and the economic situation in general during the second quarter of 2015, according to the future situation index reaching 64 points in the first quarter of this year.

The results show an improvement in the performance of the trade sector, reflected by the increase in the total value of non-oil merchandise trade in the Emirate of Abu Dhabi during the last quarter of 2014 by 15.8% compared to the same quarter of 2013 to reach about Dh 39.4 billion.

The value of non-oil exports increased by about 12.6% to reach Dh 4.7 billion. The industrial sector's performance was affected by the decrease of prices, as the producer prices index decreased by 8.6% in the fourth quarter of 2014 compared to the third quarter of the same year.

This came despite the good performance of the transformative industries, as the Industrial Production Index increased by 2.2%, while in the service sectors, the tourism sector has significantly improved, and such improvement was reflected in the increase of the number of guests and occupancy rate in addition to the hotels revenues during the month of January 2015 compared to the same month of 2014, according to the report of Abu Dhabi Tourism and Culture Authority.

The profit levels declared by some banks reflected an improvement in the performance of the banking sector during the first quarter of 2015. The real estate sector also performed well.

At the level of the size of the enterprise, the trends of the general index of confidence in the business climate show continued optimism among businesses of all classifications during the first quarter of 2015. The optimism level was adequal between large and medium-sized enterprises, with the index recording (61.4) points and (61.3 points) respectively, compared to (58.4) points for the small-sized enterprises.

This comes after a significant improvement in the levels of optimism among small and medium enterprises during the said quarter compared to the same quarter of 2014.

This also comes in line with the overview of the businesses to the economic performance of the sectors in which they operate, as many enterprises mentioned the improvement in business and sales volume and the stability of product prices and employment rate in all sectors during the first quarter of 2015. This is considered a reflection of the positive impact of development projects under implementation in various areas in the Emirate of Abu Dhabi.

At a time when optimism levels have improved among the enterprises operating in all areas of the Emirate during the first quarter of 2015 compared to the same quarter of the previous year, the economic establishments operating in Al Ain showed higher optimism levels compared to the establishments operating in Abu Dhabi and the Western Region, as the index recorded 62 in Al Ain, 61 in Abu Dhabi and 58 in the Western Region.

This optimism included the assessment of the facilities for their performance and the economic situation during the first quarter of 2015 as well as their expectations about future economic conditions.

While the majority of businesses in the Emirate of Abu Dhabi stated that there are no impediments affecting their work, some facilities, in the three regions of the Emirate, mentioned some factors affecting their activity, mainly the rents, labour laws, labour skills and prices of raw materials.

Other factors included the illegal competition, communications, transportation, and financing which affected the enterprises of various kinds