|05 April, 2020

COVID-19 smashes Saudi, UAE non-oil private sector in March - PMI

Saudi Arabia's non-oil private sector saw its biggest drop since the survey began in August 2009

Image used for illustrative purpose. Elevated view of modern city center, Riyadh, Saudi Arabia

Image used for illustrative purpose. Elevated view of modern city center, Riyadh, Saudi Arabia

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Non-oil economic activity in Saudi Arabia and the UAE slowed in March, weakening business conditions as both the countries impose restrictions to contain the spread of the coronavirus pandemic.

The seasonally-adjusted IHS Markit Saudi Arabia Purchasing Managers' Index (PMI) which covers manufacturing and services dropped to 42.4 in March from 52.5 in February. The UAE PMI fell to 45.2 in March from 49.1 in February.

A reading above neutral 50 level indicates economic expansion and below points to a contraction. March's results showcase the fastest downturn in both the Gulf countries' business conditions.

Saudi Arabia’s non-oil private sector saw its biggest drop since the survey began in August 2009 as travel and social restrictions aimed at stopping the spread of the virus affected business, according to a statement.

A fall in business activity, new orders and stocks of purchases were listed as the main factors weighing on the Saudi PMI. However, employment numbers dropped only slightly in March, which contrasted with the steep falls in output, new work and business confidence

Tim Moore, Economics Director at IHS Markit said: "Output levels and incoming new work both fell at the fastest rate since the survey began in August 2009, but staffing levels dropped only slightly.” "The latest survey data were collected between 12-23 March and therefore signal a steep economic downturn even before the tightening of workplace and travel restrictions to contain the COVID-19 pandemic," he added.

UAE companies reported sharp reductions in output, new orders and employment, while seeing notable delays to supplier deliveries as global supply chains remain disrupted.

David Owen economist at IHS Markit and author of the report, said: "New business volumes fell at a steep pace, driven by lower customer sales, reduced tourism and weaker trade as countries across the world closed borders."

(Writing by Seban Scaria, editing by Daniel Luiz)

seban.scaria@refintiv.com

#Economy #UAE # Saudi

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