Two biggest Gulf economies boom and turn corner on inflation
The two biggest Gulf Arab economies are already seeing inflationary pressures abate while business activity is picking up.
Charges set by non-oil companies slipped last month in the United Arab Emirates, helped by a decline in input costs, Bloomberg reports quoting S&P Global. Both input cost and output price inflation slowed in Saudi Arabia.
Growth in the Saudi non-oil economy reached a 10-month high in August, with S&P’s Purchasing Managers’ Index for the kingdom rising to 57.7 from 56.3 in July. Its PMI for the UAE was at 56.7, up from 55.4 and well above the 50-mark separating growth from contraction.
In Egypt, where S&P suggested inflation is slowing, the index rose to 47.6 in August, the highest reading since February, from 46.4 in July.
A drop in fuel prices in the UAE contributed to the country’s first decrease in input costs since January 2021.
“The data offers hope for other countries struggling with persistent inflation, although concerns remain that global energy supply constraints will continue to push prices higher,” said David Owen, economist at S&P Global Market Intelligence.
The upswing in the region stands in contrast to a slowdown in much of the world economy. At the same time, prices for key raw materials — from oil to copper and wheat — have cooled in recent weeks and supply chains are starting to recover from the pandemic.
