DUBAI (Reuters) – Dubai’s non-oil private sector was hit hard last month as key sectors of the Middle East’s trade and tourism hub were impacted by measures aimed at stemming the spread of the new coronavirus, a survey showed on Thursday.
The seasonally adjusted IHS Markit Dubai Purchasing Managers’ Index (PMI) fell to the lowest reading ever recorded in the decade-long survey, dropping to 45.5 in March from 50.1 in February – well below the 50.0 mark that separates growth from contraction.
Firms shed jobs to minimise their losses, particularly in the travel and tourism sector. The employment sub-index dropped to 44.8 from 50.4 in February.
“The rate of decline was the quickest since the series began in January 2010. Businesses often reported freezing hiring activity and asking employees to take leave in order to reduce staffing costs,” the survey compilers said.
The economic slowdown could wipe 5% to 6% off Dubai’s GDP this year and could even force the emirate to seek a bailout similar to the one extended by oil-rich Abu Dhabi after a 2009 financial crisis, analysts and sources have said.
“Sector data signalled that the travel and tourism industry was most drastically affected in March, amid a large drop in global tourism as countries placed border controls to limit the virus spread,” said David Owen, economist at IHS Markit.
“With all airports in the UAE now closed for commercial passengers, this weakness will persist into April and possibly the rest of the second quarter.”
Firms in construction – another pillar of Dubai’s economy – also reported a decrease in new work, while there was some business growth among wholesale and retail providers due to bulk-buying of food items.
(Reporting by Davide Barbuscia; Editing by Hugh Lawson)
