Saudi Arabia’s Industrial Production Index Rises in May
In a significant boost to the economy, the manufacturing of chemicals and food items played a key role in driving Saudi Arabia’s Industrial Production Index up by 0.9 percent in May compared to the previous month, as per official data released.
Key Sector Contributions
The General Authority for Statistics reported that the manufacturing sector saw a 0.8 percent increase, pushing the index to 106.3 points in May 2024. The manufacturing of non-metallic products also saw a rise of 0.9 percent, while the production of coke and refined petroleum products decreased by 0.4 percent during the same period.
Vision 2030 Goals
The growth in the manufacturing sector is crucial for Saudi Arabia to achieve its Vision 2030 goals of economic diversification. The Kingdom aims to localize renewable energy and industrial equipment sectors, as stated on the Vision 2030 website.
Annual Decrease in Overall IPI
Despite the positive monthly growth, Saudi Arabia’s overall Industrial Production Index saw an annual decrease of 2.9 percent in May. This decline was primarily driven by a fall in mining and quarrying activities, which dropped by 9.7 percent year-on-year.
Oil Production Impact
The decrease in oil production to 8.9 million barrels per day in May 2024, in line with OPEC+ agreements, impacted the index for oil activities, which decreased by 8.4 percent compared to the previous year. The Kingdom aims to maintain market stability by extending the oil production cut until December 2024.
Growth in Manufacturing Activities
Despite challenges in the oil sector, manufacturing activities in Saudi Arabia witnessed a growth of 8.2 percent in May compared to the previous year. Additionally, electricity, gas, steam, and air conditioning supply operations rose by 6.6 percent during the same period, showcasing resilience in non-oil economic activities.