The economy of both Saudi Arabia and the UAE is moving steadily towards recovery.
Bloomberg praised the improvement in the business situation in Saudi Arabia and the UAE to reach its best level in years, noting that the economies of the two largest countries in the Arab world are moving steadily towards recovery.
In May, the Purchasing Managers Index -PMI issued by the National Bank of Dubai (NBD) rose to its highest level since December 2017. The same index also rose to its highest level since October 2014.
The index of both countries moved above the 50-point mark, the point between contraction and growth, to 57.3 points for Saudi Arabia and 59.4 points for the UAE, the agency said in a report released on Monday.
“The growth rate in Saudi Arabia accelerated in terms of production and new demands, as companies refer to stronger conditions in the basic demand,” said Khadija Haqi, director of Middle East and North Africa research at the National Bank of Dubai, NBD.
“The recovery in the PMI this year indicates that the private sector is getting to benefit from the global oil price hike and the improvement resulting from the Saudi government’s financial position,” Haqi said.
In the UAE, Haqi attributed the improvement to “the external demand, particularly from Saudi Arabia and Oman.”
Haqi also referred that the new production and export orders in the UAE, OPEC’s third-largest oil producer, expanded at the fastest pace in years.
Although crude prices fell from their peak at the end of April, high oil prices began to have a positive impact on Gulf energy giants.
OPEC and its alliances are helping to restore some balance in the oil markets, despite the deteriorating US-China trade relations and escalating tensions in the Middle East in general.
Bloomberg said that selling prices fell for the eighth month in a row in the UAE, but job growth remained stagnant as competition dampened margins and forced companies to cut costs.
In this regard, Haqi said: “The recovery in economic activity this year has not reflected on jobs or wages so far, but it is likely to affect the growth of expatriate labor and household consumption,” Haqi said.