Saudi Arabia’s HSBC Purchasing Managers Index (PMI) for February tops the charts, in the Gulf region, with more than 58 points, a senior economist at the London-headquartered bank told Al Arabiya.
“Good growth” was seen in the Gulf Cooperation Council (GCC) states and has continued to be “very strong” in Saudi Arabia, Liz Martins said.
While Saudi PMI dropped by two points in comparison to its September 2012 reading, “throughout 2012, [Saudi Arabia’s PMI] is powered by good domestic demand, good fiscal spending, and monetary stimulus,” Martins added.
Most of the new orders or transactions in the Saudi market are domestic, showing that the kingdom’s policy that was initially driven by oil- revenue and government spending is showing its effectiveness in creating a strong domestic market along with wider private sector activity.
“We are seeing good export orders as well.”
In Saudi Arabia, the domestic market is the primary driver, however in the UAE its demand coming from abroad, especially from Arab Spring countries which gave the Gulf emirate its title “safe haven” for investors wanting to escape political turmoil.
The UAE, where the reading previously was in the low 50s, there was a “notable upturn,” with PMI reaching at about 55 points.
According to Martins, the growth in the UAE reflects “good” demand and is expected to spur inflation, however it will not be similar to the soaring rise witnessed prior 2009.
In the Arab Spring country, Egypt, the reading is negative, depicting de-accelerating and weakening private sector activities. Reaching a positive PMI is a “perquisite” for Egypt, which is suffering from low foreign currency reserves and a drained budget deficit, inorder to get its $4.8 billion loan from the International Monetary Fund (IMF), the economist advised.
PMI is based on data compiled from monthly replies to questionnaires sent to executives in 400 companies in each of the country’s industrial and service sectors.