Two-decade de ation low points to subdued economy
A fall in in ation to its lowest levels for almost 20 years comes amid fears that a recent economic upturn may be short-lived. Annual in ation decreased to minus 2.2% from minus 1.9% in January. That marked the steepest decline in consumer prices since 1999. The breakdown showed that prices were depressed by weaker housing and food in ation. The International Monetary Fund used its January 2019 interim global economy update to cut its forecast for growth in 2019 to 1.8%, 0.6 percentage points below its October 2018 world economic outlook of 2.4%. It puts it back to its forecast in its April 2018 forecasts. The IMF said in October that growth was expected to pick-up further over the medium-term as the reforms took hold and oil output increased. Although economic growth has accelerated , this was driven by oil activity that o set a slowdown in the non-oil sector that will be central to the Saudi vision of diversifying the economy away from hydro- carbons. GDP grew by +2.2% in 2018, following the -0.7% contraction in 2017. The rebound was driven by strong export expansion of 7.6% (-3.1% in 2017), thanks to much increased oil output. The headline PMI published by Emirates NDB rose to 56.6 in February 2019 from 56.2 in January, on an index where any number over 50 indicates expansion. This brought the headline index closer to its long-run average of 57.6 (since August 2009.