(MENAFN - Khaleej Times) The arab worlds two largest economies the uae and saudi arabia are seeing ongoing growth momentum this quarter unlike some mena countries that have continued to struggle.
the latest credit agricole private banking research report says data from may almost mimicked april’s figures as on one side saudi arabia and uae purchasing managers indices or pmis remained largely above the 50-point mark separating expansion from contraction while on the other struggling egypt and lebanon remained in a contractionary mood posting 48.7 and 48 marks respectively.
there was “no change in trends in the purchasing managers indices over the last two months” it said.
“this latest data have thereby confirmed that saudi arabia and the uae enjoy both growth momentum and similar rates of inflation” said dr paul wetterwald chief economist of credit agricole private banking.
in the uae the 57.3 may pmi headline figure is all the more positive because new orders were also on the rise.
this is also true of new export business which was linked to a pick-up in economic activity in neighbouring countries by the companies surveyed.
inflation remained subdued at 2.1 per cent year-on-year in the uae and three per cent in dubai in april. lower selling prices despite increased input costs reported in may should comfort this moderation.
in saudi arabia at 57 the may headline pmi (non-oil private sector economy) drifted lower to its march level from 58.5 in april.
this still-bright expansionary pace was accompanied by increases in input costs and as in the uae case by lower selling prices.
at the cpi level inflation rebounded slightly to 2.7 per cent year-on-year in april and food prices contribution could maintain it on a gentle upward slope.
dubai’s trade logistics and tourism financial sectors and consumer confidence are growing each quarter.
however in a recent research note standard chartred bank said the emirate’s non-oil trade growth is likely to be moderating to 6-7 per cent this year from 7.6 per cent. in 2012 trade grew 13 per cent.
“trade growth seems to be moderating but not plateauing. we see 2014 trade growth in the six-to-seven per cent range” it said.
the economy of the uae is now booming with dubai operating close to capacity and abu dhabi investing heavily in its own economy.
the challenge for the uae is not to generate growth but rather to manage the boom by ensuring that inflation remains in check and the economy does not begin to overheat.
dr wetterwald explained: “pmis are diffusion indices that report improvement or deterioration of activity on a sequential monthly basis. it means that it compares the current situation with the one prevailing the month before not with the one at a past reference date.”
however he said “using average values can sometimes be useful when it comes to forecast hard data as gdp. we can say that this is a by-product of the pmis surveys but not a semantically correct use of the survey’s answers.”