Riyadh April 12 2023: The Kingdom of Saudi Arabia topped the G20 countries in the performance of the Purchasing Managers’ Index (PMI) for the non-oil private sector in January 2023, recording headline growth at 58.2 points, marking consecutive growth since September 2020.
The score illustrates the strength and resilience of the Kingdom’s economy amid instability in the international markets.
The index revealed stronger commercial activity and a rise in demand for goods and services in the non-oil private sector, amid expectations within the sector that strong growth would continue despite global geopolitical developments, climate change, and increasing global uncertainty.
The index’s rise coincided with robust private sector output, which had kept pace with strong domestic demand for goods and services, driven by improvements in the most key sub-indices: Output, New Orders, New Export Orders, Stocks of Purchases, and Increased Client Orders.
The rise in the Kingdom’s PMI demonstrates growing confidence and optimism among investors and business owners, leading to a more positive outlook for the future.
The most remarkable points recorded in the index include reduced input cost pressures, reflecting the success of policies to contain the global inflationary wave in many sectors of the Kingdom, as well as continued improvements in supply chains as a result of policies to diversify the economy and enhance its flexibility over the last period.
The economic reforms for national transformation in accordance with Saudi Vision 2030 have contributed to empowering the Kingdom’s private sector by improving the quality, efficiency, and digitization of government services for businesses, as well as establishing programs, initiatives, incubators, and accelerators.
The private sector has benefitted from government support provided through the Shareek program where 28 companies have received SAR 192 billion of investment. The number of foreign investment licenses also increased in 2022, as a result of efforts to promote FDI and allowing violators of the anti-concealment law to correct their status.
The headline index rose from 56.9 points in December 2022 to 58.2 points in January 2023, above the 50.0 value separating growth from contraction. The reading was also the second-highest recorded since September 2021.
New order inflows, boosting the growth of non-oil activity, accounted for the largest increase in 16 months, to 65.3 points. This growth contributed to increased business and investor optimism, and the continuation of their expansion plans in conjunction with the improvement of market conditions.
The non-oil private sector PMI is based on questionnaires given to purchasing managers in a panel of around 400 private sector businesses engaged in industries including manufacturing, construction, wholesale, retail, and services.
The index is a weighted average of the following five indices: New Orders 30%, Production 25%, Employment 20%, Suppliers’ Delivery Times 15%, and Procurement Stocks 10%.
The Kingdom’s PMI experienced impressive growth at the same time the Kingdom’s GDP growth rate was the fastest-growing among G20 countries in 2022.
