The non-oil private sectors in the Arab world’s three largest economies returned to growth in September, with Egypt seeing its first expansion in 14 months.
Business conditions improved despite continuing job losses as companies adjusted to the economic challenges of the global pandemic while governments eased restrictions to stop the coronavirus.
A measure of non-oil private sector activity in Saudi Arabia, Egypt and the United Arab Emirates rose last month above the threshold of 50 that separates growth from contraction, according to Purchasing Managers’ Index surveys compiled by IHS Markit.
“The latest Egypt PMI data offered more optimism for businesses,” said David Owen, economist at IHS Markit. “The non-oil economy is seeing a modest turnaround after the devastating impact of the Covid-19 pandemic.”
The recovery has been fragile in much of the Middle East and faces a further test in the UAE because of a sharp pick-up in new coronavirus cases. Goldman Sachs Group Inc. expects economies in the Gulf to see a slower rebound than elsewhere because of lower oil prices and a fiscal adjustment by governments.
The recent spike of contagion in the UAE “could lead to lockdown restrictions being reimposed in the future,” Owen said. “Given the weak nature of the current rebound, any further measures could lead to a ‘double-dip’ in business activity.”
Meanwhile, on Monday Saudi Arabia added new incentives to keep its mortgage boom going by scrapping a 15 per cent value-added tax on property sales and offering other relief for home buyers amid a push by the Arab world’s largest economy to expand residential ownership.
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