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Industrial output falls in Saudi Arabia after oil cuts

Clothing, Hardhat, Helmet A worker makes notes at a Saudi Arabian steel factory; the industrial production index fell from 114 points in March 2023 to 104 in March 2024 Bill Lyons/Alamy via Reuters Connect
A worker makes notes at a Saudi Arabian steel plant: the industrial production index fell from 114 points in March 2023 to 104 in March 2024
  • Mining and quarrying down by 14%
  • Manufacturing declines 0.4%
  • Cuts impact chemical products

Saudi Arabia’s industrial output index has fallen almost 9 percent over the past year, largely due to a policy of oil production cuts the government began in mid-2022.

The industrial production index fell from around 114 points in March 2023 to 104 in March 2024, as mining and quarrying fell by 14 percent and manufacturing fell by 0.4 percent, the General Authority for Statistics said in its latest release. 

Mining and quarrying fell “as Saudi Arabia decreased its oil production to 8.9 million barrels per day in March 2024,” it said.

But the output cuts had a knock-on effect as the manufacture of coke and refined petroleum products fell by just over 2 percent and chemicals and chemical products were down by a little over 5 percent. 

Manufacturing in sectors such as paper products, electrical devices and beverages has increased over the year. 

No hard numbers were given but finance ministry data shows oil exports fell nearly 18 percent to SAR226.8 billion in the first quarter of 2024 compared to 276 billion the year before and non-oil exports slipped nearly 2 percent to SAR69.8 billion from 71 billion. 

Saudi Arabia, the world’s largest oil exporter, began the cuts in 2022 and supported an ongoing Opec+ policy of output cuts in an effort to prop up prices amid waning global demand. 

Opec and its allies, known as Opec+, agreed last month to keep oil output cuts in place until the end of June but could extend them again. 

Saudi Arabia’s economy took a hit due to the output cut policy, contracting 0.8 percent in 2023, although the government says non-oil activity was 50 percent of GDP for the first time. 

The economy also contracted by 1.8 percent year on year in the first quarter of 2024, while growth in non-oil activities slowed to its lowest rate in a year. There was a first quarter budget deficit of SAR12.4 billion ($3.3 billion), four times higher than a year ago. 

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