5 January, 2021

Non-oil economies of Saudi Arabia and UAE improve in December as recovery continues

UAE economy saw renewed momentum, with business activity jumping to highest level in 16 months at the end of 2020

Businesses activity in the non-oil private sector of the Arab world’s two biggest economies – Saudi Arabia and the UAE – expanded sharply in December as recovery from a coronavirus-induced economic slowdown continued. The headline seasonally adjusted IHS Markit UAE Purchasing Managers' Index – a composite gauge designed to give a single-figure snapshot of operating conditions in the non-oil private sector economy – rose to 51.2 in December from 49.5 in November to underline a renewed improvement in the sector’s performance. New business also surged in December at a “more marked pace compared to November's slight rate of expansion”. Anecdotal evidence linked the upturn to a solid rise in demand from abroad, particularly from Gulf countries. New export orders grew at the strongest rate in 15 months. “Rising output and new orders, particularly from abroad, were key drivers of the renewed improvement in non-oil business conditions in December,” David Owen, an economist at IHS Markit, said. “Notably, the PMI rose above the 50 no-change threshold for the first time since September, and was at its highest level since August 2019.” UAE firms also expanded purchasing activity in December, partly offsetting the reduction recorded in November. The rise in purchases helped firms to rebuild stock levels, which improved for the first time since August.

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