Link to article:https://www.aljazeera.com/economy/2020/10/5/bbbusiness-activity-in-saudi-arabia-egypt-uae-returns-to-growth
Analysis: Seeing its first economic expansion in 14 months Egypt, along with the Arab worlds three largest economies, returns to a state of growth.
Despite deterioration in August and continuing job losses, as companies adjust and overcome the economic challenges of COVID-19, the non-oil private sectors improved last month.
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. This threshold serves to separate growth from contraction, according to Purchasing Managers’ Index surveys compiled by IHS Markit. Qatar’s Financial Center PMI fell sharply but stayed above the critical 50 mark.
Though financial recovery has been fragile in the Middle East, it faces further trials in the UAE because of a dramatic rise in new COVID-19 cases. Goldman Sachs Group Inc. expects economies in the Gulf to see a slower rebound than elsewhere because lower oil prices have forced a fiscal adjustment by governments.
The recent surge in Coronavirus cases 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.”
Renewed business activity in Saudi Arabia, Egypt, and the UAE could be the signs of economic recovery, and a step back to normality. Though the UAE’s economic expansion isn’t overwhelming, it is impressive in light of today’s current events. With the IHS Markit Egypt PMI rising to 50.4 from 49.4 in August, Saudi Arabia’s PMI monthly expansion advancing to 50.7 from 48.8, and the UAE’s climb to a PMI of 51 in September from 49.4, economic recovery looks inevitable. Even a modest turnaround can be impactful in lieu of the devastating impact of the COVID-19 pandemic and continued job losses. Hopefully these upticks in economic activity will offer more optimism for businesses as the UAE faces another wave of COVID-19 cases.
The UAE is a sovereign state. Egypt officially known as the Arab Republic of Egypt is also a sovereign state along with Saudi Arabia. These three states are all part of the of the Arab Free Trade Area which is an economic IGO. This IGO was formed to foster economic cooperation among member states. With the help of this IGO and the return of economic growth in the Arab worlds three largest economies, countries grappling with a struggling economy may have a chance to prosper.