Mena regional purchasing managers’ index (PMI) data tracked the global momentum higher in September, with Mena economies printing above 50 –the first time in 25 months, a report said.

While the region is past the nadir in contraction across the region with easing in restrictions shaping the recovery, the PMI gains were modest with labour market pressures continuing to linger, accentuating the constraints confronted with navigating the oil-virus shocks, said the Mitsubishi UFJ Financial Group (MUFG), a Japanese bank holding and financial services company in its latest Mena Economic Weekly.

Overall, the September PMI readings signal that activity gained pace. Notwithstanding a confluence of austerity implementation, and ongoing virus containment measures, corporates remain optimistic in executing risk-reward opportunities.

However, employment pressures continue to trigger a surge in expatriate outflows which could undermine consumption and risk labour market shortfalls that could impede output, investment and overall real GDP growth.

Taking stock of GCC economic performance in navigating the oil-virus shocks

Lockdowns and social distancing measures continue to cautiously ease across the GCC region as authorities attempt to strike the delicate balance between limiting further damage to their economies weighed against health risks.

As far as our regional forecasts are concerned, our base case assumes that we continue on a path of tentative and occasionally interrupted re-opening, rather than seeing further iterative waves of the pandemic that forces a return to draconian lockdowns. However, that does not mean there will be no lingering impact on consumer behaviour from the pandemic or no permanent economic damage from the measures put in place to contain it, the report said.

MUFG’s forecasts point to a region which, by end 2021, has a level of activity that is not just well below its pre-pandemic growth trajectory but, in many cases, still below its end 2019 level. We forecast deep recessions across almost all GCC regional economies this year, with overall GCC real GDP growth to decline from +0.5% in 2019, to -4.5% in 2020, but thereafter picking up to +3.7% in 2021. – TradeArabia News Service