Arab Today, arab today euro crisis ripples felt in middle east
Last Updated : GMT 09:03:54
Arab Today, arab today
Arab Today, arab today

Euro crisis ripples felt in Middle East

Arab Today, arab today

Arab Today, arab today Euro crisis ripples felt in Middle East

Dubai - Arabstoday

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. From:TheNational

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