March witnessed a robust expansion in Saudi Arabia’s non-oil business activities, with the sector’s output hitting a six-month peak. This surge is an indicator of the kingdom’s progressive strides towards the ambitious targets of its Vision 2030 blueprint.
The non-oil domain has notably contributed to the nation’s GDP, accounting for half of it for the first time ever – a historic leap in diversifying the economy beyond its traditional reliance on fossil fuels.
As per the seasonally-adjusted Riyad Bank Saudi Arabia Purchasing Managers’ Index, the figure for March stood at 57.0. Despite a slight dip from February’s 57.2, it comfortably surpassed the 50.0 threshold, which signifies industry growth.
March’s output sub-index climbed to 62.2 from 61.5 in the prior month, marking the strongest reading since the previous fall, with manufacturing sector new orders playing a significant role in this growth.
“The market is demonstrating remarkable resilience, as seen by the surge in new clientele and orders, indicating a robust trajectory for growth,” stated Naif Al-Ghaith, Riyad Bank’s chief economist.
He also highlighted that this dynamic has spurred faster procurement and workforce expansion, reflecting an optimistic market forecast.
Additionally, the new orders sub-index escalated to 64.0 in March, up from February’s 62.2, marking a second successive month of acceleration. Foreign sales saw improvement too, albeit at a modest rate.
Government investments have been bolstering non-oil sectors like tourism, construction, and manufacturing to achieve the Vision 2030 benchmarks, which aim to diminish the economy’s oil dependency.
Optimism surrounding the 12-month business outlook brightened in March, particularly within construction, wholesale, and retail.
At the forefront of these transformations is Crown Prince Mohammed bin Salman, known as MBS, who envisions Saudi Arabia as a formidable economic force in the region. The recent economic data, showing a 4.4% real GDP growth rate for the non-oil business in 2023, values the sector at approximately 1.7 trillion Saudi riyals (around $453 billion).
This significant non-oil sector boost can be credited to a 57% increase in private-sector investment over the previous two years, culminating in a record $254 billion investment in 2023.
Leading the surge in growth, the arts and entertainment sector reported an astounding 106% increase between 2021 and 2022, followed by substantial growth in accommodation, food services, transportation, and storage sectors.
Real service exports, majorly fueled by tourism, soared with a 319% growth over two years, underscoring Saudi Arabia’s evolution into a key global tourism and entertainment hub and reinforcing its economic diversification efforts.