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Saudi Arabia’s non-oil business activity jumps on higher output

REUTERS/Faisal Al Nasser
The growth confirms the Saudi position as the fastest-growing economy among G20 nations

Growth in Saudi Arabia’s non-oil business activity accelerated in January, having hit a three-month low the previous month, a survey showed on Sunday, supported by an increase in new orders and output.

The seasonally adjusted Riyad Bank Saudi Arabia Purchasing Managers’ Index increased to 58.2 in January, from 56.9 in the previous month and well above the 50 mark separating growth from contraction.

Earlier this week, the kingdom’s statistics agency released flash estimates of GDP growth in the fourth quarter of 2022, during which the non-oil activities sector grew 6.2 percent, outperforming broader economic growth of 5.4 percent in the quarter.

“This growth confirms the Saudi position as the fastest-growing economy among the Group of 20 countries despite economic headwinds,” said Naif Al-Ghaith, chief economist at Riyad Bank.

“This was driven by the ongoing improvement in the business environment, private-sector employment, and increased foreign investment with governance and labour market reform,” Al-Ghaith added.

The output sub-index rose to 63.6 in January from 61.0 the previous month, mainly on higher demand, as the new orders sub-index jumped to 65.3 from 62.9 in December, with the strongest increase recorded among service providers.

While companies continued to add staff however, the rate of job creation eased slightly in January from December’s near five-year high, to 51.2 from 52.0.

Confidence among private firms in the non-oil sector increased to a two-year high last month with survey participants forecasting a strong year ahead supported by new order inflows, high capacity, and lower expected costs.