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OPEC Member Countries Economy - September 2017

Source: OPEC 10/4/2017, Location: Middle East

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Inflation in Saudi Arabia posted -0.3% y-o-y in July, maintaining its notable easing since the beginning of the year due to the baseline effect, which could be a supporting factor for private consumption. The non-oil private sector grew at a solid pace in August. The Emirates NBD Saudi Arabia PMI for August registered 55.8, up from 55.7, suggesting continued solid improvement in the business conditions of the non-oil private sector. The index survey showed a sharp rise in output and new orders accompanied by a record increase in inventories. The survey showed that private sector firms faced further capacity pressure for the tenth consecutive month in August, which led to payroll rise. The increase in salaries together with the rise in prices of purchased input have raised the cost burden, which eventually transferred to consumers. Yet, price increase was negligible. The index average of 1H17 stood at 56.0, highlighting a higher growth rate compared with the first six months of 2016. Further increase of demand have encouraged optimistic expectations over the coming 12 months outlook by the country’s non-oil private firms.

After five quarters of recession, the economy of Nigeria registered 0.6% y-o-y growth in 2Q17, from a contraction of 0.5% y-o-y in the previous quarter, according to the National Bureau of Statistics. Inflation is on an easing trend since the beginning of the year, posting 16.1% y-o-y in July vs 18.7% in January. The naira was largely stable after depreciating by 50% in June–August 2016. It appreciated slightly by 0.1% m-o-m in August. In another positive note, the country’s private sector registered its fastest pace of growth in 26 months in August as suggested by the Stanbic IBTC Bank Nigeria PMI. The index jumped to 55.0 in August, from 54.8 in July and 52.9 in June because of the fast pace of expansion in both output and new orders. Despite the pace of acceleration in new business somewhat eased last month, growth achieved could still be deemed as strong. The survey also suggested a contraction in new export orders for the second consecutive month in August and most of the demand came from the domestic market.

Inflation in the United Arab Emirates (UAE) eased from nearly 3.0% y-o-y in March to 2.0% y-o-y in June. The ease in prices of housing, water, electricity and gas was behind the fall in the overall index. The subcategory of housing, water, electricity and gas showed notable decline from 1.5% y-o-y in May, to 1.0% y-o-y in June. In addition, prices of the recreational, cultural goods and services was in the negative territory since December 2016. It declined by 7.8% y-o-y in June, following the 5.4% y-o-y drop a month earlier. Most of other categories of consumer prices were largely stable in June. Expansion in the country’s non-oil private sector rose in August to its quickest pace since February 2015, according to the Emirates NBD UAE PMI. The index stood at 57.3 in August, up from 56.0 in July on a large expansion in new orders. The survey also showed that new export orders increased for the first time in three months, with other GCC countries are perceived as major international markets. The current expansionary trend in new orders was reflected into slightly higher employment. The firms’ upbeat sentiment towards short-term outlook have led to large increase in their inventories by fastest rate in history of the survey, preparing for episodes of greater output.

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