Revenue of non-oil private sectors across the Middle East shrank, as coronavirus-prompted lockdowns hammered the economy, reports showed.
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¶¶Òõ¶ÌÊÓƵ's non-oil private sector shrank for the second consecutive month in April and its output hit a record low as lockdowns and business closures to tackle the new coronavirus hammered the economy, a survey showed on Tuesday.
The seasonally adjusted IHS Markit ¶¶Òõ¶ÌÊÓƵ Purchasing Managers' Index (PMI) rose slightly to 44.4 in April from 42.4 in March, which was the lowest reading since the survey began in August 2009.
April is only the second time the headline index has fallen below the 50.0 mark that separates growth from contraction. The slight rise from March reflected "a slower reduction in new work and a stronger contribution from the suppliers' delivery times component," the survey compilers wrote in a report.
"¶¶Òõ¶ÌÊÓƵn private sector output fell at the fastest pace since the survey began more than a decade ago, reflecting widespread business closures and a sharp reduction in customer demand," said Tim Moore, economics director at IHS Markit.
"Export sales and international supply chains were also severely impacted by the global COVID-19 pandemic in April, with both indices hitting survey-record lows," he said.
As of May 3, ¶¶Òõ¶ÌÊÓƵ had reported 27,011 cases of COVID-19, the disease caused by the new coronavirus, and 184 deaths - both the highest out of the six Gulf Cooperation Council countries.
The kingdom has taken strict measures to curb the virus, including curfews, business closures and travel restrictions. It has allowed some malls to reopen for limited hours, but restaurants, schools, mosques and other public places remain shut.
Egypt
Egypt was also hit by a shutdown in the tourism industry, weakening demand and the imposition of a curfew as the government battled the new coronavirus pandemic.
IHS Markit's PMI for the non-oil private sector came in at 29.7 last month, down from 44.2 in March and far below the 50.0 threshold that separates growth from contraction. It was the lowest reading since the survey began nine years ago.
"The reading signalled a severe decline in business conditions," IHS Markit said.
The pandemic led firms to put in place large cost-saving measures, including labour reductions, and caused some to close altogether, IHS Markit said.
The novel coronavirus's spread virtually shut down Egyptian tourism, which International Cooperation Minister Rania al-Mashat last week said accounted for 5% of gross domestic product. The last scheduled airline flights to Egypt ended on March 19.
Restaurants, coffee shops and hotels have also been shut down, and a curfew is in place from 9:00 pm to 6:00 am.
"Businesses lucky enough to remain open scaled back activity on a massive scale, as many highlighted sharp falls in domestic sales and foreign demand," said IHS Markit economist David Owen.
The new orders subindex plunged to 14.1 from 40.2 in March, the worst reading in the last nine years. Purchasing slid to 21.0 from 39.5 in March as companies drew down inventories in the face of uncertain demand.
The contraction in staffing, however, remained relatively subdued, with the employment subindex inching down to 46.1 from 47.0.
"Business expectations remain strong though, in fact improving since March, which may suggest firms will look to retain workforces for when the economy reopens," Owen said.
UAE
The United Arab Emirates' (UAE) non-oil private sector also fell to a record rate for the second month running in April, as lockdown measures to fight the coronavirus pandemic piled pressure on an already sluggish economy.
The seasonally adjusted IHS Markit UAE Purchasing Managers' Index (PMI), which covers manufacturing and services, fell to 44.1 in April from 45.2 in March. The 50.0 mark separates expansion from contraction.
The output and new export orders sub-indices fell sharply, both falling to record lows since the survey began in August 2009. Output tumbled to 39.9 in April from 47.2 in March.
"Shop closures and restrictions in domestic and international travel had huge repercussions on new business, which fell at an unprecedented pace after also declining sharply during March," said Owen.
"Business sentiment reached the lowest in nearly three years, reflecting heightened uncertainty from the COVID-19 crisis. While firms on balance remain optimistic of growth in the coming year, some panelists were apprehensive, noting that the risk of an economic downturn was increasing," Owen said.
As of May 3, the UAE had reported 14,163 cases of the novel coronavirus and 126 deaths, the highest number of deaths after ¶¶Òõ¶ÌÊÓƵ among the six Gulf Cooperation Council countries.
The authorities have imposed strict lockdown measures to stem the spread of the virus, including a 24-hour curfew in Dubai that was eased in late April as the Muslim fasting month of Ramadan began.
Malls, dine-in restaurants and cafes in Dubai, the country's business and tourism hub, were allowed to resume operations with limited capacity. This week, malls in the capital Abu Dhabi began to reopen and Sharjah followed.
But travel, tourism and trade, major contributors to the economy, both remain largely at a halt.
"Tourism declined sharply again, as countries worldwide imposed similar restrictions amid the virus pandemic. Along with reduced demand from foreign clients, this led to a steep fall in export business, one that was unprecedented in the survey history," the report said.
New export orders fell to 35.2 in April from 44.3 in March.
