UAE’s Wealth Sentiment rises with price of oil

A key indicator of how the rich are feeling about their wealth in the UAE and the wider Middle East and North Africa rose this month as rising oil prices stoked optimism about the health of the economy.

The Wealth Sentiment Index, sponsored by the Abu Dhabi lender FGB, rose by 0.4 per cent to 1,024.61 this month from 1,020.52 last month. The measure, which tracks attitudes of the wealthy towards their wealth, began in January with the March results being the third reading.

The gauge is produced in conjunction with research agency Ipsos and insurance provider Generali.

“The March index score reflects a positive outlook on the economy and confidence which stems from stable crude oil prices, an increase in the non-oil Purchasing Managers’ Index, the inflow of tourists to the country and an overall increase across global stock markets, on the back of positive economic news, primarily from the US,” said Odisseas Trikaliotis, the senior research director at Ipsos. The UAE Purchasing Managers’ Index, a measure of non-oil activity in the UAE, rose to a 17-month high last month.

That growth in activity came as new orders rose and prices increased for the first time in more than a year, according to the survey of economic sentiment in the country.

The survey, sponsored by Emirates NBD and produced by IHS Markit, hit a high of 56 last month, up from 55.3 in January. A reading above 50 indicates the economy is expanding; below that figure it is contracting.

Despite the growing optimism, many other economists remain cautious about a full economic recovery in the short term as oil prices remain far below 2014 levels even though they have more than doubled to about US$50 per barrel.

Standard Chartered reduced its GDP growth forecast for the UAE to 2.1 per cent this year from 3 per cent but it expects the economy to grow by 3.5 per cent next year ahead of Expo 2020 in Dubai.

Follow The National's Business section on Twitter