RIYADH: Saudi Arabia’s private sector outside the hydrocarbon industry demonstrated remarkable vigor in February, buoyed by surging consumer spending, strategic workforce scaling, and bullish economic forecasts, according to the newly released Riyad Bank Purchasing Managers’ Index. The PMI registered 58.4, underscoring sustained growth even as it moderated from January’s 10-year peak of 60.5.
Regional Contrasts Emerge
While Saudi Arabia’s index showed only modest softening, regional peers faced sharper challenges. Kuwait’s PMI contracted to 51.6 following employment cuts, while Egypt’s fragile rebound edged down to 50.1, barely sustaining growth above the critical 50-point threshold for the second consecutive month.
“The convergence of robust domestic consumption, rebounding global trade, and stabilized supply networks positions Saudi Arabia’s non-oil economy for sustained advancement through 2025,” noted Naif Al-Ghaith, Chief Economist at Riyad Bank. The PMI, a composite gauge tracking business activity, order volumes, employment, and supplier performance, has remained above expansion territory for 20 consecutive months.
Order Books Signal Confidence
Survey data revealed striking momentum: 35% of businesses reported rising new orders, dwarfing the 5% that saw declines. Export demand also surged, highlighting international appetite for Saudi goods and services, with firms attributing part of this success to tactical discounting and promotional campaigns.
Workforce Expansion Hits 16-Month Peak
A standout feature of February’s data was the accelerated hiring pace, reaching levels unseen since late 2022. This uptick was most pronounced in manufacturing and service sectors, where companies are scaling operations to align with projected demand. Al-Ghaith linked this trend to corporate optimism: “Workforce growth mirrors corporate confidence in the economy’s direction—businesses aren’t just responding to current needs but preparing for future opportunities.”
Vision 2030 Catalyzes Diversification
Analysts credit Saudi Arabia’s economic metamorphosis to strategic reforms under Vision 2030, with infrastructure megaprojects and regulatory modernization creating fertile ground for private enterprise. Tourism influxes—fueled by initiatives like the extended visitor visa program—and targeted industrial investments have further diversified revenue streams beyond hydrocarbons.
Balancing Costs and Competition
Despite growth, businesses navigated persistent cost headwinds from wage inflation and material prices, though input cost rises slowed to a four-month low. While some firms passed these pressures through modest price adjustments, intense market competition limited pricing power, compelling operators to prioritize efficiency gains.
2025 Horizon: Optimism Builds
The forward-looking business sentiment index hit its highest level in three months, with executives anticipating enhanced foreign investment, supply chain optimization, and continued government support. This confidence aligns with IMF projections forecasting Saudi Arabia as among the world’s fastest-growing major economies this year.
As global energy transitions accelerate, Saudi Arabia’s non-oil sector—now contributing over 50% to GDP—appears poised to cement its role as the economy’s cornerstone, offsetting regional volatility through deliberate diversification and reform momentum.
Source : https://www.arabnews.com/