Specialized survey .. a record decline in private sector activity in Saudi Arabia and a setback in the UAE and Egypt

Non-oil private sector activity in Saudi Arabia contracted again, and suffered another setback in the UAE, while it collapsed in Egypt in April, due to the effects of the Corona virus (Covid-19), according to a specialized survey.

Shrinkage in Saudi Arabia and
in Saudi Arabia The IHS Market PMI-Tuesday showed that the non-oil private sector contracted for the second month in a row in April, and its production reached a record low, as public isolation measures and companies closed to counter the emerging Corona virus. , In damaging the economy.

The main index rose to 44.4 points in April, compared to 42.4 points in the previous March. But April was the second month in which the main index fell below the 50-point level between growth and deflation.

"Private sector production has fallen at the fastest pace since the survey began more than ten years ago, reflecting large-scale corporate closings and sharp shrinking customer demand," said Tim Moore, head of economics at IHS Market.

"Export sales and global supply chains were also hit hard by the Covid-19 global pandemic in April, while the two (sub) indices reached record lows in the survey," he added.

The production sub-index in the IHS Market survey fell to a record low of 37.5 points in April, and new business fell sharply, while the sub-index of employment fell at the highest pace since the survey began more than ten years ago.

Saudi Arabia was hit hard by the Covid-19 pandemic, which was accompanied by a historic drop in oil prices, which puts pressure on its plans to diversify the economy away from dependence on oil. This is expected to result in the kingdom registering a much larger fiscal deficit.

And Saudi Finance Minister Mohammed Al-Jadaan said last Saturday that his country will take strict and painful measures to deal with the economic repercussions of the pandemic, and that all options are put forward to address the crisis.

An unprecedented decline in the UAE
and the IHS Market PMI-Tuesday showed that the non-oil private sector in the UAE contracted at a record pace for the second consecutive month in April, as public isolation measures to combat the emerging Corona virus pandemic intensified pressure On the already slowing economy.

The index of the manufacturing and services sectors fell to 44.1 points in April, compared to 45.2 points in March. Note that any reading above the 50 level indicates growth, and below that indicates contraction.

The production and new export orders index fell sharply, and the production index fell to 39.9 points last month, compared to 47.2 points in the previous month.

Tourism has declined sharply as countries around the world imposed similar restrictions amid the pandemic.

"The closing of stores and restrictions on travel internally and externally, have had tremendous implications for new activities that have come down at an unprecedented pace after a sharp downturn in March," said David Owen, economist at IHS Market.

He added, "Business sentiment recorded its lowest level in almost three years, which reflects the growing uncertainty due to the Covid 19 crisis. While companies are generally optimistic about growth in the coming year, but some participants are skeptical and point out that the risk of economic decline is increasing."

Significant decline in Egypt
As for Egypt, the non-oil sector fell sharply last April, affected by the interruption of the tourism sector and weak demand and the imposition of a curfew while the government is fighting the pandemic of the emerging Corona virus.

The IHS Market’s non-oil private sector purchasing managers ’index reached 29.7 points last month, down from 44.2 points in March, dropping significantly from the 50 level separating growth and contraction.

The IHS Market report said, "The reading indicates a severe decline in business conditions," adding that the pandemic led companies to implement major measures to reduce costs, including reducing labor, and even caused some companies to be closed entirely.

The spread of the new Corona virus has caused an almost complete halt to the Egyptian tourism sector, which Minister of International Cooperation Rania Al-Mashat said last week represented 5% of GDP; the last regular flights to Egypt stopped on March 19.

"Companies that were fortunate enough to remain open have reduced activity on a large scale, with many of them indicating sharp declines in domestic sales and external demand," said David Owen. The sub-indices of orders and employment also plummeted.