Although all opinions indicated that the economic recovery from the consequences of the Corona virus, for the 3 largest Arab economies, would be confined to the two forms (U), that is, a major decline in economic performance followed by stability and then great growth, and a (V) shape, i.e. a major decline in the economy followed by a recovery Fast, data showed that economic performance may fluctuate to reach pre-Corona levels.
The data, seen by Al Arabiya Net, shows that business conditions have taken a turn for the worse in those economies, accompanied by the loss of more jobs, which accelerated in an unprecedented way in the UAE.
After stabilizing in July, data showed that non-oil private sector activity in Saudi Arabia, Egypt and the UAE began to worsen last month, and was below the 50-point level that separates growth from contraction, according to the PMI.
In the UAE, prospects for business sentiment fell for the next 12 months to the lowest level since the start of measuring the performance of non-oil activity in the country.
The leading PMI in the UAE declined to 49.4 points in August, after a two-month growth streak.
In Saudi Arabia, the main PMI fell to 48.8 in August, from 50 in July. In Egypt, the index fell to 49.4 points in August from 49.6 points in July.
And expectations of companies in the three countries indicate that the economic recovery will take a “W” shape, meaning a decline followed by growth, then decline, and then growth.
Firms in the UAE had expected activity to rise again, but only temporarily, as business confidence fell to an all-time low.
As such, companies have cut sales prices sharply in order to maintain their competitive edge in an uncertain future, according to a report by Market Economics.
In Saudi Arabia, many companies indicated that consumer confidence remained weak despite efforts to reopen the economy.
However, some areas saw improvement, notably as companies shed light on the recovery of tourism.
The report added that business confidence rose to its highest level in 6 months, with an increase in inventory as well, indicating positive indicators of future growth.
As for Egypt, the report indicated that companies were less certain about the economic outlook in August, with the level of confidence falling to its lowest level in 3 months. He added that in light of this uncertainty, companies resorted to reducing their purchases further, while the costs of production inputs rose for the third month in a row, and led to a renewed rise in product prices.