Shock waves from the euro-zone economic crisis are hitting the GCC as new export orders for UAE companies fall and business growth in Saudi Arabia falters.
Export orders in the UAE's private sector dropped at their steepest in more than two years last month, according to data from HSBC's Purchasing Managers' Index (PMI).
Overall growth held firm, however, with the headline reading rising from 53.2 in June to 53.4.
Saudi Arabia's headline score slid by 1.6 percentage points to 58, the second monthly fall in a row. Both readings are still above the 50 mark separating growth from contraction.
Seasonal factors and Ramadan may account for some of the weaker data, experts say. But HSBC economists believe the impact of the euro-zone crisis is playing a part, too.
"The UAE is vulnerable," said Liz Martins, a senior economist at HSBC in the Middle East. "New export orders held up very well in the first half of the year but we always said it was vulnerable to global conditions and the problems in the euro zone."
Continuing troubles in the European single currency are already buffeting other economies around the world by sapping demand for exports and souring business sentiment.
China's manufacturing sector shrank for a ninth straight month last month, HSBC's PMI survey shows.
Similar data reveal the euro zone's private sector is also performing below the growth threshold.
In comparison, companies in the UAE and Saudi Arabia are showing more resilience.
While employers in the euro zone are laying off staff, UAE companies are still hiring. Last month, employment rose at its sharpest since April last year, recording a seventh consecutive monthly gain.
Strong demand at home helped to drive new order volumes for UAE firms, the survey showed.
But although export sales also rose again, the rise was the weakest since June 2010. Companies surveyed said securing foreign buyers was becoming increasingly tough because of a trickier business environment abroad. The drop in new export orders was the sharpest since the survey began.
Saudi Arabia's economy has been buoyed by high levels of public spending. Last year, the kingdom unveiled a 24 per cent rise in state spending, including a two-month bonus for public-sector workers and transfers to banks supporting small and medium enterprises.
"With output, new orders and stock purchases all weakening, the survey paints a clear picture of a non-oil economy decelerating after a strong nine-month run and suggests that the weaker global environment may have begun to weigh," Simon Williams, the HSBC chief economist in the Middle East, and Ms Martins wrote in a research note.
Other data released yesterday also pointed to uneven conditions within the UAE economy.
Bank loans rose 1.5 per cent in June from the month earlier to Dh1.1 trillion (US$299.48 billion), according to data from the Central Bank. Although the rate of growth is stronger than it has been in recent months, it is still slower than in other parts of the GCC.
But deposits slid by 1.6 per cent to Dh1.11tn over the same period, the third month running a decline has been reported. The figures meant banks' loan to deposit ratio had reached 99 per cent, a level that potentially kept a lid on banks' appetite to lend, said Ms Martins.
Credit growth was a key catalyst in the economy's rapid growth before the global financial crisis of 2008.
tarnold@thenational.ae
THE SPECS
Engine: 1.5-litre turbocharged four-cylinder
Transmission: Constant Variable (CVT)
Power: 141bhp
Torque: 250Nm
Price: Dh64,500
On sale: Now
Real estate tokenisation project
Dubai launched the pilot phase of its real estate tokenisation project last month.
The initiative focuses on converting real estate assets into digital tokens recorded on blockchain technology and helps in streamlining the process of buying, selling and investing, the Dubai Land Department said.
Dubai’s real estate tokenisation market is projected to reach Dh60 billion ($16.33 billion) by 2033, representing 7 per cent of the emirate’s total property transactions, according to the DLD.
The%20specs
%3Cp%3E%3Cstrong%3EPowertrain%3A%20%3C%2Fstrong%3ESingle%20electric%20motor%0D%3Cbr%3E%3Cstrong%3EPower%3A%20%3C%2Fstrong%3E201hp%0D%3Cbr%3E%3Cstrong%3ETorque%3A%20%3C%2Fstrong%3E310Nm%0D%3Cbr%3E%3Cstrong%3ETransmission%3A%20%3C%2Fstrong%3ESingle-speed%20auto%0D%3Cbr%3E%3Cstrong%3EBattery%3A%20%3C%2Fstrong%3E53kWh%20lithium-ion%20battery%20pack%20(GS%20base%20model)%3B%2070kWh%20battery%20pack%20(GF)%0D%3Cbr%3E%3Cstrong%3ETouring%20range%3A%20%3C%2Fstrong%3E350km%20(GS)%3B%20480km%20(GF)%0D%3Cbr%3E%3Cstrong%3EPrice%3A%20%3C%2Fstrong%3EFrom%20Dh129%2C900%20(GS)%3B%20Dh149%2C000%20(GF)%0D%3Cbr%3E%3Cstrong%3EOn%20sale%3A%3C%2Fstrong%3E%20Now%3C%2Fp%3E%0A
57%20Seconds
%3Cp%3E%3Cstrong%3EDirector%3A%3C%2Fstrong%3E%20Rusty%20Cundieff%0D%3Cbr%3E%3Cstrong%3EStars%3A%20%3C%2Fstrong%3EJosh%20Hutcherson%2C%20Morgan%20Freeman%2C%20Greg%20Germann%2C%20Lovie%20Simone%0D%3Cbr%3E%3Cstrong%3ERating%3A%20%3C%2Fstrong%3E2%2F5%0D%3Cbr%3E%0D%3Cbr%3E%3C%2Fp%3E%0A
At a glance
Global events: Much of the UK’s economic woes were blamed on “increased global uncertainty”, which can be interpreted as the economic impact of the Ukraine war and the uncertainty over Donald Trump’s tariffs.
Growth forecasts: Cut for 2025 from 2 per cent to 1 per cent. The OBR watchdog also estimated inflation will average 3.2 per cent this year
Welfare: Universal credit health element cut by 50 per cent and frozen for new claimants, building on cuts to the disability and incapacity bill set out earlier this month
Spending cuts: Overall day-to day-spending across government cut by £6.1bn in 2029-30
Tax evasion: Steps to crack down on tax evasion to raise “£6.5bn per year” for the public purse
Defence: New high-tech weaponry, upgrading HM Naval Base in Portsmouth
Housing: Housebuilding to reach its highest in 40 years, with planning reforms helping generate an extra £3.4bn for public finances
Rooney's club record
At Everton Appearances: 77; Goals: 17
At Manchester United Appearances: 559; Goals: 253
RESULT
Bayern Munich 5 Eintrracht Frankfurt 2
Bayern: Goretzka (17'), Müller (41'), Lewandowski (46'), Davies (61'), Hinteregger (74' og)
Frankfurt: Hinteregger (52', 55')
Call of Duty: Black Ops 6
Developer: Treyarch, Raven Software
Publisher: Activision
Console: PlayStation 4 & 5, Windows, Xbox One & Series X/S
Rating: 3.5/5
Stormy seas
Weather warnings show that Storm Eunice is soon to make landfall. The videographer and I are scrambling to return to the other side of the Channel before it does. As we race to the port of Calais, I see miles of wire fencing topped with barbed wire all around it, a silent ‘Keep Out’ sign for those who, unlike us, aren’t lucky enough to have the right to move freely and safely across borders.
We set sail on a giant ferry whose length dwarfs the dinghies migrants use by nearly a 100 times. Despite the windy rain lashing at the portholes, we arrive safely in Dover; grateful but acutely aware of the miserable conditions the people we’ve left behind are in and of the privilege of choice.
The Bio
Favourite holiday destination: Either Kazakhstan or Montenegro. I’ve been involved in events in both countries and they are just stunning.
Favourite book: I am a huge of Robin Cook’s medical thrillers, which I suppose is quite apt right now. My mother introduced me to them back home in New Zealand.
Favourite film or television programme: Forrest Gump is my favourite film, that’s never been up for debate. I love watching repeats of Mash as well.
Inspiration: My late father moulded me into the man I am today. I would also say disappointment and sadness are great motivators. There are times when events have brought me to my knees but it has also made me determined not to let them get the better of me.
Our legal consultant
Name: Dr Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
The specs
Engine: Four electric motors, one at each wheel
Power: 579hp
Torque: 859Nm
Transmission: Single-speed automatic
Price: From Dh825,900
On sale: Now
Australia tour of Pakistan
March 4-8: First Test, Rawalpindi
March 12-16: Second Test, Karachi
March 21-25: Third Test, Lahore
March 29: First ODI, Rawalpindi
March 31: Second ODI, Rawalpindi
April 2: Third ODI, Rawalpindi
April 5: T20I, Rawalpindi
NO OTHER LAND
Director: Basel Adra, Yuval Abraham, Rachel Szor, Hamdan Ballal
Stars: Basel Adra, Yuval Abraham
Rating: 3.5/5
