Saudi posts post 8.4% slump in trade as UAE credit growth dives
Posted on 09 February 2010 with no comments from readers
Those global economists who think the Gulf Oil States will help to pull the world out of recession should look again at the latest data. Falling container volumes at the ports in Saudi Arabia signal a downturn, not a recovery, as does a big contraction in credit growth in the UAE.
Container volumes at the kingdom’s ports fell by 9.1 per cent to 11.9 million tonnes in November in comparison with the same month a year earlier, according to the Saudi Ports Authority. Imports were down 14.9 per cent to 4.9 million tonnes, while exports fell 4.9 per cent to 6.9 million tonnes.
8.4% fall in trade
For the January to November period total container volume in the Arab World’s largest economy slumped by 8.4 per cent to 129.3 million tonnes.
Then again consider credit growth in the UAE, the region’s second largest economy. Between 2003 and 2008 the annual growth in total bank credit grew from 18.4 to 38.4 per cent. Last year it plummeted to 2.4 per cent, and the Central Bank predicts credit growth will stay low in 2010.
Both the new figures for Saudi trade and credit growth in the UAE are consistent with economic recession, and that is clearly the immediate outlook for the Gulf Oil States.
The rebound in oil prices from the lows of December 2008 has prevented the situation from being worse than this, but total oil revenues fell in 2009 with lower prices and output. The knock-on effect on the non-oil sectors is clear, although this has been compounded by a real estate crash in the UAE.
Recession hits
However, the kingdom is not avoiding the slowdown as some economists hopefully suggested it might. Trade data is amongst the most reliable from which to make economic projections, and not generally prone to later statistical revisions.
That said the Saudi Arabian trade figures are better than the 16 per cent slump in China for 2009, the country most often cited as likely to lead the world out of the worst economic slump since the 1930s.
It could still be that in relative terms the Gulf States are something of a safe haven for business activity, but untouched by global realities they are most certainly not.
