Non-oil sectors in Gulf unaffected by Russia’s invasion of Ukraine, March PMI suggests

RIYADH: Dubai’s non-oil economy expanded strongly in March, as output and new business both rose sharply despite cost pressure reaching a 40-month high, revealed a PMI survey by S&P Global.

Since February, UAE non-oil firms’ rate of new business growth has also been unchanged and remains close to the post-pandemic high seen in November 2021.

Domestic sales were the main growth driver, but the new export business grew modestly.

As a result of the substantial rise in demand, business activity increased substantially during March, with nearly a quarter of companies reporting growth, the survey disclosed.

Increased marketing efforts and new products also spurred business activity in the region.

“A strong rise in demand across the non-oil economy in March masked the concerning threat posed by global commodity prices,” said David Owen, an economist at S&P Global.

“With energy and raw material costs rising worldwide following the Russia-Ukraine war, UAE firms faced a sharp increase in purchase prices and the most marked rise in overall price pressures for more than three years,” he added.

At the same time, businesses faced substantial price increases in fuel and raw materials due to supply concerns stemming from the Ukraine war. Input cost inflation was higher than the series average and solid.

Some businesses sought to pass-through higher costs to their customers, which resulted in average output charges falling to the least extent in the current eight-month decline.