The growth of the non-oil private sector economy in Saudi Arabia accelerated last September to its highest level in 4 months, driven by a rise in new orders and employment.
This came in a monthly report issued by Riyad Bank for Purchasing Managers, on Thursday, which said that its Purchasing Managers’ Index in Saudi Arabia, which measures the performance of the non-oil private sector, rose to 56.3 points last September from 54.8 points in the previous August.
The bank stated that the index recorded its highest reading since last May, moving further away from the level of 50.0 points, which indicates growth, while a level less than 50 points indicates contraction.
Increased business conditions and strong employment opportunities contributed to the improvement, “despite difficulties in finding skilled employees that led to a shortage in production capabilities,” according to the bank.
The report added: “The non-oil private sector witnessed a noticeable acceleration in the growth of new orders during the month of September. The volume of new orders increased due to improved domestic demand, new customers, and promotional efforts.”
Commenting on the report, Nayef Al-Ghaith, chief economist at Riyad Bank, said: “Companies have responded to the increase in domestic demand, which plays a decisive role in reducing the Kingdom’s dependence on oil revenues.”
He added, “This growth in the non-oil producing sector is considered particularly important, in light of the current context of reduced oil production and lower global oil prices.”
Saudi Arabia expects a larger fiscal deficit over the next few years as spending increases to achieve the goals of its Vision 2030 economic plan, but it estimates the non-oil sector will grow at 3.7% this year from an average of about 6% over the past three years.
Business confidence in the 12-month business outlook fell in September from a 5-month high in August.
On Wednesday, Moody’s credit rating agency expected continued strong growth in the Saudi non-oil economy during the period 2025-2027, supported by economic diversification programs and major projects linked to the Kingdom’s Vision 2030.
Moody’s said – in its report on the Saudi economy – that the real growth of non-oil GDP is expected to record a rate ranging between 5% and 5.5% during that period, compared to an average of 4.6% in 2022-2023 and only 1.5% between 2017. -2019.
