Despite announcement of a US$1 trillion (Dh3.67tn) aid package to contain a sovereign debt crisis, the euro is at its lowest level since September 2008. The crisis in Europe is leading to the euro’s slide against the US dollar and is likely to impact Gulf industrial exports to the EU, particularly for metals and petrochemicals. The outlook for the euro remained bleak. The euro has dropped against the US dollar, to which 5 of the 6 GCC currencies (UAE, Saudi Arabia, Bahrain, Qatar and Oman) are pegged, thus pushing up price of exports from GCC states. Producers are likely to see a decline in sales to Europe as the falling euro makes the Gulf less competitive when selling into European markets.
The falling euro has tanked Saudi Arabia’s Tadawul All Share Index. The heavyweight petrochemicals Tadawul All Share Petro Index has fallen 5% with the biggest declines revealed by petrochemical makers including Saudi Basic Industries Corporation, Yanbu and Saudi Kayan.
Exports from the GCC to the 27-member EU were valued at €21.7 billion (Dh98.5bln) last year. Oil made up the bulk of goods exported, along with petrochemicals, aluminium and other goods such as live animals and beverages. Any contraction in the size and value of the EU market could speed up a general trend towards a decline in the importance of the region compared with fast-emerging markets.
18-May-10 
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