Business activity across Middle Eastern and North African economies showed mixed trends for the month of August. The latest PMI data from S&P Global shows the UAE leading growth while Kuwait and Egypt recorded contractions.

Riyadh

Saudi Arabia has demonstrated economic resilience despite a decline in oil prices and budget adjustments. The country has compensated for reduced public capital expenditure with increased private sector investment, including contributions from government-related entities. This has supported strong domestic demand and robust consumer spending, as reflected in recent PMI figures.

Additionally, job growth in the private sector and a rise in workforce participation, particularly among women, have contributed to the positive economic outlook. While the region's exports have been affected by weaker demand from Asia and Europe, domestic consumption has offset these challenges. Egypt, meanwhile, continues to face subdued export growth but is showing signs of improvement due to government investment and monetary easing.

Haque: Private sector is strong in Saudi Arabia

Good to have you with us on the show. Before we delve into the details of the PMI numbers that came through from the region I just want to ask you sort of an overarching question about oil given you know the oil dynamics We're just speaking about it with our reporter He was saying that the analysts expectation on the street is that we are going to see a supply gluts come Q4 beginning of Q1 of next year that could pose further downward pressure on oil How have countries in the region done so far this year with a weaker oil backdrop? We talk about oil trading down, you know, eight nine percent of the year They've actually done pretty well actually given particularly the volatility around oil prices in the second quarter of the year We still ended up with an average oil price in the first half of around $70 a barrel So it wasn't enough to keep all the budgets in surplus and we did see some of the countries needing to issue more debts out of Arabia in particular needing to go to markets to Finance the the budget deficit that they were running but in terms of the impact on the economy, I think so far It's been quite limited. We've seen some cuts to capital investment spending in the budget in Saudi Arabia That was down by about 30% in the first half of the year But that obviously has been offset by increased private sector investment including government related entities So that investment story is continuing and I think that's helping to underpin Domestic demand not just in Saudi Arabia, but really across the region that's been quite strong this year So let's pick up on some of the most recent PMIs the numbers that came through yesterday You know one of the numbers that really struck out to me Saudi Arabia's PMI still coming in at 56 handle 56.4. I mean you hear all these stories about Potential slowdown and Saudi Arabia cutting down on spending at the PMI numbers are telling you a different story So I think that is really reflecting private sector stepping in and helping to Compensate for some of the budget cuts on the capex side I think overall public sector investment is still quite strong because don't forget the public investment fund is driving a lot of these big infrastructure projects as well And where were you seeing? Reprioritization it still means that there is investment going on It's just perhaps on the projects that are required in a relatively short time frame In order to host these global events that are coming up, but the other story I think in Saudi Arabia is that Consumption is actually quite strong as well So household spending has been very robust in the first half of the year The latest data from the central bank is showing over 10% growth in consumer spending through July on a on a year-on-year basis And that's being supported by job growth in the private sector So that's helping to drive population growth in the kingdom overall. We're also seeing Greater number of women entering the workforce and that's helping to support Household incomes the rise of double-income households. All of this is really positive for the consumer story in Saudi Arabia And I think that's been a job people forget that those are some of the key hallmarks of Saudi 2030 vision There's so much emphasis on the big mega projects and the line, but obviously you have more people working you have private sector investment You have women participating in the workforce. So all of that is very evidently showing up in these PMI figures super interesting Let me ask you another question as it pertains to we asked about oil But I want to also ask you about tariffs as well and just sort of how the region Specifically the GCC region has weathered some of the uncertainties around terrorism Obviously they were spared the most extreme tariff rates around the world But still there has been a noticeable impact on global sentiments. So the the regional Dynamics are quite different The direct impact of tariffs is quite limited for our region because we don't export a huge amount to the u.s Most of our exports go to Asia particularly China and also to Europe. So the impact is more second round It's reflected in we could demand for oil from oil consuming countries in Asia We can export demand or rather import demand from Europe So the market for exports say from Egypt to Europe is perhaps a little bit softer So that external backdrop is a little bit weaker and that has shown up in the PMI surveys where we've seen export growth Slow quite sharply this year but again That's been offset by a very strong domestic story and that's underpinned both by the consumption dynamics and also the one of the countries That stands out though in terms of PMI misses and and sort of subdued PMIs as Egypt still sub 50 Yesterday's number came in at forty nine point two versus estimates of forty nine point five. What is going on in Egypt? Where are some of the headwinds coming from right now? So a lot of the you know Drive drags on growth I guess have come from the structural reforms that Egypt has gone through over the last couple of years But we're actually in a position now where most of the hard stuff has kind of been bedded down We're starting to see a recovery in government spending and government investment in Egypt I think the softer PMIs again are reflecting that weak export story. So the weak European demand story right but we are you know, we're seeing a rate cuts from the Central Bank in Egypt We had 200 basis points last week. It's a significant amount of easing and that's facilitated by slower inflation from a stronger Egyptian pound as well Continued investment from the Gulf from portfolio investment as well. And so that story is quite constructive I think going forward and in the first half of the year, the GDP figures were pretty strong they were over 5% in terms of H1 growth, so I think overall the story is quite positive for Egypt

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