The fastest pace of deflation ... Corona is affecting the private sector in Saudi Arabia, the UAE and Egypt

A specialized survey showed today, Sunday, that the new Corona virus (Covid-19) fueled the contraction of the performance of the private sector in Saudi Arabia and Egypt, and deepened the slowdown of companies in the UAE, amid fears of this contraction.

The survey spoke about the contraction of the non-oil private sector in Saudi Arabia last March, at the fastest pace ever, due to emergency measures to contain the outbreak of the Corona virus, which hit companies with their dependents.

The IHS Market Purchasing Managers Index in Saudi Arabia fell to 42.4 points last month compared to 52.5 points the previous month, in the biggest drop since the survey began in August 2009, and that was also the first drop of the main index from the fifty threshold between growth And contraction.

In order to contain the spread of the virus, the Kingdom imposed escalating social restrictions that led to the closure of companies and the decline in orders to supply the new and buy stocks and postpone projects.

"(The data) indicates a severe economic slowdown even before tougher business and travel restrictions to contain the Covid-19 pandemic," said Tim Moore, head of economics at IHS Market.

The pressure is exacerbated by a fall in crude prices due to lower global demand and a price war between Riyadh and Moscow, which will likely lead to a sharp increase in the public budget deficit this year.

A drop of the index from the level of 50 points means that there is a contraction, while exceeding this level indicates expansion.

UAE .. fueling the slowdown
In the UAE, the specialized survey showed that the emerging Corona virus pandemic contributed to fueling the slowdown of the non-oil private sector in the country, which is already suffering, bringing the situation of companies to the lowest level ever.

The IHS Market PMI for the manufacturing and services sectors in the UAE fell to 45.2 points in March compared to 49.1 in February, and this is the largest contraction ever amid social and travel restrictions aimed at containing the outbreak of the Corona virus that hit the markets .

David Owen, economist at IHS Market, the author of the report, said, "New business volumes have declined sharply due to declining sales to consumers, shrinking tourism and weak trade as countries around the world close their borders."

"At the same time, the closure of airports in the UAE and the policies of working from home - as we see around the world - are likely to lead to a continued decline to include April, especially since there is no end to the epidemic on the horizon," he added.

Analysts say Dubai - the commercial and tourist hub of the Middle East - may suffer a drop in gross domestic product between 5 and 6% this year if the HIV-related measures continue for another three to four months.

Last March, the UAE suspended all passenger flights for two weeks until April 8 to combat the outbreak of the Corona virus, and this constitutes a severe blow to the country's vital tourism sector.

Egypt: a bigger contraction
Also in Egypt, the survey showed the non-oil private sector contracted at a much faster rate in March compared to February, in light of the widening economic slowdown around the world due to the Corona virus.

The IHS Market index of the non-oil private sector scored 44.2 points last month, down from 47.1 points in February, well below the 50-point threshold between growth and contraction.

This contraction is the most severe since January 2017, shortly after Egypt embarked on austerity measures as part of an economic reform program supported by the International Monetary Fund, signed in November 2016.

David Owen said, "The global economy is noticeably absorbed by the repercussions of the pandemic as Covid-19, and the Egyptian non-oil private sector has not deviated from this."

The spread of the new Corona virus has almost completely halted the Egyptian tourist sector, and the sector constitutes an estimated 15% of GDP.