Saudi Arabia’s Non-Oil Private Sector Shows Strong Growth in July
In a report by the Riyadh Bank Saudi Arabia PMI survey, compiled by S&P Global, it was revealed that the Kingdom’s non-oil private sector experienced robust growth in July. The Purchasing Managers’ Index slightly softened to 54.4, down from 55 in June and 56.4 in May.
Driving Factors Behind the Growth
Any PMI reading above 50 indicates growth in the non-oil sector, while readings below 50 signal contraction. The report highlighted sustained demand and heightened competitive pressures as key drivers for the growth in the non-oil private sector. This growth is crucial for Saudi Arabia as it aims to diversify its economy and reduce dependence on crude revenues.
Expert Analysis
Naif Al-Ghaith, chief economist at Riyad Bank, emphasized the importance of demand in driving orders and maintaining business activity. Despite market competition leading to downward pressure on prices, businesses have managed to expand staffing and inventory levels.
Expanding International Markets
The survey results indicated strong growth of Saudi non-oil businesses in international markets, with new exports expanding to increase net non-oil trade. This trend showcases the success of Saudi businesses in penetrating global markets and diversifying the economy away from oil dependency.
Future Outlook
While output and new orders expanded at a slower pace at the start of the third quarter, higher client demand, a healthy work pipeline, and increased government investments are boosting business owner confidence for future growth. The combination of steady demand, competitive pricing, and expanding exports paints a positive outlook for Saudi Arabia’s economic growth.