https://arab.news/68ycm
DUBAI: The hair-trigger tension between Tehran and Washington after the killing of top Iranian general Qassem Soleimani early January weighed on business activity in the region, a monthly survey of private companies showed.
Furthermore, the downside risks to regional economic growth remain high with the coronavirus from China spreading globally and disrupting travel and trade as well as impactive on Chinese demand.
Countries including the US, Australia, Singapore, and the Philippines have imposed travel restrictions to and from China while major companies such as Apple, Disney and Tesla have suspended operations, temporarily shutting factories and discouraging staff travel.
Saudi Arabia’s Purchasing Managers’ Index (PMI) dipped to 54.9 in January from 56.9 in December, the lowest reading in more than a year, as new order growth slowed despite increased output from the private sector, Khatija Haque, the head of MENA Research at Emirates NBD, sad in a report
“Nevertheless, domestic demand in the Kingdom appears to be holding up well,” Haque noted, and a majority of Saudi companies were either expecting higher production or at unchanged levels despite business sentiment at weakest since 2018.
The UAE’s PMI meanwhile shifted into contraction territory in January, the first time since August 2009, slipping to 49.3 as new orders and employment declined on average compared to December. A PMI reading above 50 suggests economic growth and a subpar 50 meanwhile suggests contraction.
While businesses remain optimistic about their output in 12 months’ time, coinciding with the Expo 2020 Dubai, the degree of optimism has softened since November, Haque said.
Egypt meanwhile remains in the doldrums with a 46.0 OMI reading in January, the lowest level since early 2017.
“The decline is in common with dips seen in Saudi Arabia and the UAE, likely affected by the uncertainty seen throughout the month which will have weighed on Egypt’s key tourism and transport and logistics sectors,” Haque wrote.
New export orders from Egypt also feel at the fastest pace since October 2016, just prior to the start of the IMF program, when a weaker Egyptian currency was widely expected, she added.
“This slowdown will be a challenge to Egypt’s economy in 2020. The non-oil private sector has lagged in terms of its growth recovery, but recent communiqués from the Central Bank of Egypt’s monetary policy committee have indicated that the private sector is seeing some green shoots of recovery,” Haque wrote.
“Should this be materially derailed then Egypt’s growth may undershoot our expectations.”