Saudi Arabia’s Industrial Production Index Sees Increase Driven by Manufacturing Activities
In a positive turn of events, Saudi Arabia’s Industrial Production Index (IPI) edged up 1 percent in February compared to the previous month, fueled by a surge in manufacturing activities.
Manufacturing Sector Leads the Way
The General Authority for Statistics reported a 1.2 percent month-on-month increase in the Kingdom’s sub-index of manufacturing activity in February. This growth was supported by a rise in the production of coke and refined petroleum products, which increased by 0.4 percent.
Mining and Quarrying Activities Show Marginal Increase
The sub-index for mining and quarrying activity also saw a slight uptick of 0.6 percent month-on-month in February. Meanwhile, electricity, gas, steam, and air conditioning supply surged by 7.6 percent during the same period.
Decline in Mining and Quarrying Sector
Despite the overall increase in the IPI, Saudi Arabia’s IPI decreased by 7.7 percent in February compared to the same month of the previous year, primarily due to a drop in mining and quarrying activity. The sub-index for this sector decreased by 13.8 percent as Saudi Arabia reduced its oil production to 9 million barrels per day.
Impact of OPEC+ Agreement
The decline in mining and quarrying activities can be attributed to Saudi Arabia’s decision to decrease crude output in alignment with the OPEC+ agreement. The Kingdom decided to reduce oil output by 500,000 barrels per day in April 2023, a decision that has been extended until the end of December 2024.
Positive Growth in Manufacturing Sector
On a positive note, manufacturing activities in Saudi Arabia rose by 2.1 percent in February compared to the same period of the previous year, driven by an increase in the production of non-metallic products. Additionally, electricity, gas, steam, and air conditioning activities, along with water supply, sewerage, waste management, and remediation activities, recorded annual increases. However, due to their low weight in the index, they did not have a significant impact.