Saudi Arabia is witnessing a remarkable journey of growth and opportunity, as evidenced by the steady expansion of its non-oil business activities in April. Despite a slight deceleration in new order growth, the Kingdom’s domestic demand continues to drive robust output, signaling a thriving economic landscape.
Resilient Growth Amidst Challenges
The Riyad Bank Saudi Arabia Purchasing Managers’ Index (PMI) held firm at 57.0 in April, maintaining the same level as March and comfortably surpassing the 50.0 threshold that signifies expansion. This indicates a healthy and expanding business environment.
The Output subindex, though slightly down to 61.9 from the six-month high of 62.2 in March, still reflects strong demand, particularly in the Wholesale & Retail sector, which leads the way in output growth. According to Naif Al Ghaith, Riyad Bank’s chief economist, this upward trend suggests a promising increase in the non-oil GDP, potentially exceeding 4.5% this year.
Vibrant Market Dynamics
While there was a moderation in new order growth, which fell to 61.0 from 64.0 in March, domestic business conditions remained robust, underpinning sales. The manufacturing sector also contributed significantly, ensuring export orders remained in expansion mode.
Despite a 1.8% contraction in the overall economy year-on-year in the first quarter, largely due to declining oil activities, the non-oil GDP showcased resilience with a 2.8% increase over the same period. However, quarterly figures show a slight slowdown, with non-oil GDP rising only 0.5% from the previous quarter, while government activities saw a 1% decline.
Optimistic Future Prospects
Looking ahead, the 12-month business outlook remains positive and widespread across various sectors, as highlighted by the survey. This optimism suggests that Saudi Arabia is on a promising path, offering vast opportunities for foreign investors to participate in its dynamic and growing market.
