World Cement - July 2020

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contraction in their economies – the MENA region
as a whole is expected to undergo an economic
contraction of 3.3%, slightly worse than the
predicted global average of 3%. These figures
from the IMF are based on lockdown conditions
peaking in the second quarter of this year and then
being gradually reversed. However, if the lockdown
has to remain in place for longer, it could result in
“the worst recession since the Great Depression,
and far worse than the Global Financial Crisis”
according to Gita Gopinath, Economic Councillor &
Director of the IMF’s Research Department.
Saudi Arabia is anticipated to see a contraction
of -2.3% overall, with non-oil activity expected to
decline by 4%. Perhaps the
highest profile economic
casualty is the Kingdom’s
much vaunted Vision 2030
plan, which has had its
funding cut by US$8 billion.
The cuts were made as part
of a SAR100 billion austerity
programme designed to
lessen the combined impact
of declining oil prices and
the pandemic. As well as
cutting expenditure, the
Kingdom recently tripled its
value-added tax to 15% and
cut cost-of-living allowances
to government workers.
Saudi’s largest construction
company, Binladin
International Holding Group,
responsible for the Abraj
Al Bait golden clocktower
complex in Mecca, has also
been seeking advice on how
to cut costs and restructure
debt in the wake of an
economic downturn.
There is equally gloomy
news from the UAE; a
shocking 70% of businesses
in Dubai are expecting to
go bust within six months
as lockdowns and travel
restrictions eliminate
demand, according to a
recent survey conducted by
the Emirate’s Chamber of
Commerce. Dubai has done
much to diversify its economy
away from oil, but the sectors
it now relies upon (tourism,
hospitality, retail, property)
have all been devastated
by the pandemic. In its
recent report titled ‘Impact
of Covid-19 on Dubai Business Community’, the
Chamber of Commerce stated that: “Full and partial
city-lockdown measures are bringing demand in key
markets to a standstill [...] The double-shock impact
is pushing economic activity down to levels not
seen even during the financial crisis.”
On the positive side, members of the Gulf
Cooperation Council (GCC) like Saudi Arabia
and the UAE, are otherwise generally well placed
to deal with the pandemic as they tend to have
well-equipped healthcare systems and younger
populations. Ahmed Esam, Assistant Economist at
Oxford Economics, was quoted as saying “GCC
countries, with the exception of Bahrain due to its
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