Gulf’s top two economies suffer record declines after Covid-19 hit

The non-oil economies of the energy-rich Gulf states are likely going in reverse this year, shrinking in the case of Saudi Arabia for the first time in more than three decades, after the one-two punch of collapsing crude prices and the health emergency.

Business conditions in the United Arab Emirates worsened at a record pace in March and dropped at the fastest in over a decade in Saudi Arabia after emergency steps taken to stop the spread of the coronavirus.

Businesses and travel across the region are in lockdown to stop the spread of the pandemic. (Yogendra Kumar/HT PHOTO)

IHS Markit’s gauge tracking operating conditions in the non-oil private sector economy in Saudi Arabia dropped below the threshold of 50 that separates growth from contraction for the first time since the survey began in August 2009, reaching 42.4 in March. Its U.A.E. Purchasing Managers’ Index fell to 45.2 in March, the lowest ever, from 49.1 in February.

The non-oil economies of the energy-rich Gulf states are likely going in reverse this year, shrinking in the case of Saudi Arabia for the first time in more than three decades, after the one-two punch of collapsing crude prices and the health emergency. Businesses and travel across the region are in lockdown to stop the spread of the pandemic.

The Gulf’s commercial hub, Dubai imposed further restrictions on the movement of people and halted metro services. A program to clean the streets will be extended to 24 hours for two weeks from Saturday, while supermarkets, pharmacies and food delivery services will continue operating.