Saudi Arabia’s non-oil private sector continued to show impressive resilience in March, as the Kingdom’s Purchasing Managers’ Index (PMI) stood at 58.1, marking the highest among its Middle Eastern counterparts.
According to the latest Riyad Bank Saudi Arabia PMI report, compiled by S&P Global, the Kingdom’s non-oil businesses saw a noticeable increase in new orders, although the growth rate was slightly slower compared to the near-record high seen in January.
Despite a slight decline from February’s 58.4, the March PMI still outperformed the UAE’s PMI of 54, Kuwait’s 52.3, and Qatar’s 52.
This consistent positive reading above the 50 threshold highlights growth within the non-oil private sector, further signaling economic expansion.
This sustained momentum is a clear reflection of Saudi Arabia’s Vision 2030 initiative, which aims to reduce the Kingdom’s dependency on oil while fostering growth in key sectors such as tourism, manufacturing, logistics, and financial services.
Resilience and Robust Growth in Saudi Arabia’s Non-Oil Sector
Naif Al-Ghaith, the Chief Economist at Riyad Bank, emphasized that Saudi Arabia’s non-oil sector continues to show “significant resilience and growth.”
This resilience is a testament to the vitality of the sector and its critical role in the Kingdom’s ongoing economic diversification efforts. Vision 2030’s strategic goals are being met as the non-oil private sector demonstrates sustained expansion.
In line with this positive trend, employment levels within the non-oil sector remained strong in March, supported by increased demand for goods and services.
The pace of job creation remained steady, matching February’s 16-month high. In fact, job growth within the first quarter of this year marked the fastest rate since the third quarter of 2012.
This surge in employment is directly tied to businesses scaling up operations to meet growing demand, which supports Saudi Arabia’s efforts to reduce the unemployment rate among nationals, aiming for a target of 7%.
Growth of Non-Oil Activities Boosting Saudi Arabia’s Economy
Non-oil activities now make up more than 52% of Saudi Arabia’s GDP, as reported by Minister of Economy and Planning, Faisal Al-Ibrahim, during the World Investment Conference in Riyadh last November.
Since the launch of Vision 2030, non-oil sectors have grown by 20%, underscoring the success of the diversification strategy.
The PMI report highlights the role of marketing efforts, lower selling prices, and improved economic conditions in driving sales growth among Saudi Arabia’s non-oil businesses.
Additionally, new export orders showed positive growth, with non-oil exports surging by 10.7% in January, reaching SR26.48 billion ($7.06 billion).
This increase reflects the growing international demand for Saudi non-oil products.
As companies continue to expand their operations, inventory levels also saw a significant rise in March, reflecting optimism about future sales.
This uptick in stockpiling suggests that non-oil businesses in Saudi Arabia are positioning themselves for sustained growth in the coming months.
Focus on Attracting Foreign Investment and Expanding Competitiveness
As part of Saudi Arabia’s Vision 2030, attracting foreign investment is a top priority. The Kingdom aims to bring in $100 billion annually in foreign direct investment by the end of the decade.
The S&P Global report indicates that the improved business conditions, alongside infrastructure investments and regulatory enhancements, are creating a conducive environment for private and foreign investments.
The report also noted improvements in suppliers’ delivery times in March, driven by strong vendor relationships.
However, some supply chain disruptions and administrative delays contributed to a slower-than-expected performance in certain areas, leading to a rise in outstanding work and backlogs.
Easing Input Costs and Strategic Pricing Adjustments
The survey also revealed that input cost pressures eased significantly in March, with inflation reaching its lowest point in over four years.
This reduction in input costs allowed businesses to lower their selling prices for the first time in six months, which could further stimulate demand and contribute to the Kingdom’s economic stability.
Conclusion
With each positive shift in the PMI and continued economic growth, Saudi Arabia is on a clear path to achieving a diversified and sustainable economy in line with Vision 2030.
The non-oil private sector continues to thrive, fostering job creation, attracting investments, and contributing to the overall economic health of the Kingdom.
For further details, you can read the full report from Arab News.
