Saudi PMI Plummets

Saudi Arabia’s Purchasing Managers’ Index edged lower last month as new orders contracted. Saudi PMI fell to 51.4 in April from 52.8 in March, which represents the lowest reading since the series began in August 2009.

The PMI report from the UAE’s largest bank, Emirates National Bank of Dubai, showed that the kingdom’s new orders weakened in April, Arabian Business reported.

According to ENBD, firms blamed “subdued market demand, competitive pressures and unpredictable economic conditions” for the decline.

Despite the overall weakness of April’s survey, future expectations remained high, with around 43% of firms expecting their output to be higher in a year’s time.

“The average PMI for Saudi Arabia year-to-date is 52.6. This is well below the average for 2017 of 56.1, and also much lower than the long-run series average of 57.9,” said Khatija Haque, head of MENA research at Emirates NBD.

“That non-oil private sector activity has slowed so sharply this year is surprising to us, particularly when we consider the expansionary budget that was announced for 2018 to support growth in the non-oil sectors and the unexpectedly high oil price year-to-date, which usually drives stronger non-oil sector activity,” Haque added.

ENBD said the “softer than expected” PMI data year-to-date raises the downside risks to its 2.5% Saudi GDP growth forecast for 2018.

Meanwhile, oil-importing countries in the Middle East have been warned to make deeper reforms and provide jobs for tens of millions of young people—or risk growing social and political upheaval.

In the wake of a regional report by the International Monetary Fund, unemployment, especially among young men, was described by one expert as “the most pressing challenge facing non-oil producing countries in the next decade”.

The IMF said on Wednesday that economic growth in countries such as Morocco, Jordan, Egypt, Somalia, Sudan and Tunisia was too weak to tackle widespread joblessness.

IMF said, joblessness leaves countries such as Egypt and Jordan, with their large youth populations, facing rising social instability.

Growth rates were likely to average 4.9% over 2018–22, the IMF said, and were “too soft” to effectively reduce unemployment, particularly for the young people who make up a large percentage of the region’s population.