Saudi Arabia non-oil business activity grows robustly in March
Business
The trend shows the kingdom is set to achieve the goals set under Vision 2030
DUBAI (Web Desk/Reuters) – Strong demand helped drive non-oil business activity in Saudi Arabia in March, with output accelerating to a six-month high, a survey showed on Wednesday.
The latest figures come as 2023 saw the Saudi non-oil sector reaching 50 per cent of GDP for the first time, marking a watershed moment in diversification of economy by reducing dependence on fossil fuels which were once the mainstay of income and revenues.
The seasonally-adjusted Riyad Bank Saudi Arabia Purchasing Managers' Index stood at 57.0 in March, slightly lower than 57.2 in February, but well above the 50.0 mark denoting expansion in activity.
The output sub-index rose to 62.2 in March from 61.5 the previous month, its strongest since September last year, supported by new orders particularly in the manufacturing sector.
"The strong performance witnessed across various sectors, coupled with the notable increase in order books and new customers, signifies a resilient market poised for growth," said Naif Al-Ghaith, chief economist at Riyad Bank.
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"The positive momentum also prompted accelerated purchasing activities and additional hiring, underscoring a buoyant market outlook," he added.
The new orders sub-index jumped to 64.0 in March from 62.2 in February, the second consecutive month of acceleration. Foreign sales also improved for the second month in a row but the pace of growth was modest.
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Government investment is supporting non-oil sectors such as tourism, construction and manufacturing to meet the objectives of Vision 2030, the kingdom's roadmap to end the economy's dependence on hydrocarbons.
The 12-month business outlook brightened in March, especially in the construction, wholesale and retail sectors, the survey said.
LIFE UNDER MBS
It is Crown Prince Mohammed bin Salman – commonly known as MBS – who has been leading the country towards the stated goal of Saudi Arabia becoming an economic hub in the region, which will compete with global economic powers.
Hence, Saudi Arabia is on its way to meet the objectives set out in Vision 2030 – a policy defined by MBS, as the government data showed that the real GDP growth rate for non-oil business in 2023 stood at 4.4pc, valuing the sector at about 1.7 trillion Saudi riyals (around $453 billion).
The significant contribution from non-oil sectors is attributed to a surge in private-sector investment over the past two years, with a remarkable growth rate of 57pc. This has pushed private investment to a record high of $254bn in 2023.
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Arts and entertainment activities led the pack with an exceptional 106pc growth between 2021 and 2022. Other sectors like accommodation, food services, transportation, and storage also witnessed robust growth, expanding by 77pc and 29pc, respectively.
Real service exports, primarily driven by tourist spending, have skyrocketed over the past two years, experiencing a growth rate of 319pc. This reflects the significant impact of Saudi Arabia's transformation into a global tourism and entertainment destination, further propelling economic diversification and growth engines.
