Entering the third quarter, the persistent COVID-19 pandemic is forcing the world to navigate a new, post-lockdown norm amid heightened uncertainty and growing fears of a second wave.
Middle Eastern economies have opened up after implementing one of the most stringent lockdowns in March. Stronger PMI data were reported by GCC economies in May and June but the medium-term impact is still to be fully measured as the imminent surge is credited to the reopening of vital sectors of the economy after months of shutdown.
The International Monetary Fund has lowered its 2020 economic forecast for the Middle East and is now projecting a contraction of 5.7%. For the region’s major economies like Saudi Arabia and the UAE, the double impact of the strict lockdowns and the freefall in oil prices had brought many key sectors to a complete halt, affecting their business operations and recovery. Some other parts of the region not only suffered a huge hit from the pandemic but also are struggling either with internal conflicts or financial crises.
The Hajj pilgrimage, which is the most important and holy period for Muslims, represents Saudi Arabia’s main tourism season with more than 2.5 million visitors hosted every year and over US$ 8 billion generated for the economy. This July, the Hajj will be accessible only to Saudi residents, with restricted numbers allowed to access Mecca.
In Dubai, the economy has fully opened - including airports receiving tourists from the first week of July. The travel and tourism sectors were hit hardest in this hub city.
As for non-ferrous metals, there has been an increase in activity on the export side since early May after lockdowns were eased; most yards have returned to business and local collections have been resumed. Another support for the increase in activity was higher LME prices, with copper jumping more than 40% from its March levels to US$ 6600 per tonne owing to supply disruptions in South America resulting from a rising number of COVID-19 cases in the region.
Aboura Metals (ARE), Board Member of the BIR Non-Ferrous Metals Division