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  • 06-06-23

    Saudi Arabia's Non-Oil Sector Shows Strong Momentum in May, Driving Economic Diversification

    (MENAFN) Saudi Arabia's economic diversification efforts continue to yield positive results, with the non-oil sector gaining substantial momentum in May, as revealed by the latest Riyad Bank Saudi Arabia Purchasing Managers' Index (PMI) report. The PMI stood at 58.5 for May, well above the threshold of 50, indicating economic growth. Although this figure reflected a slight decrease compared to April's reading of 59.6, it still signifies that overall economic activity in Saudi Arabia is holding up well, according to Naif Al-Ghaith, chief economist at Riyad Bank.

    Al-Ghaith emphasized that the robust PMI figure reinforces the belief that the Kingdom's non-oil gross domestic product (GDP) is likely to experience notable growth in the second quarter of the year, driven by the healthy state of the private sector. While challenges such as a slower oil economy and rising interest rates may affect some businesses, the majority of Saudi firms remain in good shape and are benefiting from robust business conditions.

    The report highlighted the significant increase in new order inflows within the non-oil private sector businesses in Saudi Arabia during May. In April, this growth had reached its highest level in over eight-and-a-half years, indicating a strong upward trend. Although the rate of expansion slightly slowed in May, there was a renewed upturn in sales from foreign clients. The rise in new orders had a positive impact on the tourism and construction sectors, which, in turn, led to increased job creation in the Kingdom.

    The data from the PMI report underscores the ongoing success of Saudi Arabia's efforts to diversify its economy away from oil dependence. The government's vision for economic transformation, outlined in initiatives such as Vision 2030, is gradually materializing, with the non-oil sector playing a pivotal role in driving growth and job creation. As the Kingdom continues to implement structural reforms and invest in sectors beyond oil, it is expected to sustain economic resilience and further strengthen its position as a diversified and dynamic economy.

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