What's happened
Saudi Arabia's non-oil economy shows resilience with a June PMI above 50, signaling expansion. Riyad Bank’s PMI points to the strongest end of Q2 since February, while manufacturing and exports face mixed signals amid regional tensions and supply-chain disruptions linked to the US–Iran conflict.
What's behind the headline?
Analysis
- Saudi PMI signals: The Riyad Bank PMI has moved above 50, indicating expansion as Q2 closes. This aligns with S&P Global readings showing improved non-oil activity despite external pressures.
- Domestic demand vs. external headwinds: Domestic demand is lifting activity, while exports are contracting due to regional tensions and logistics constraints, especially in oil-related sectors.
- Policy implications: Sustained non-oil growth supports diversification efforts; policymakers will likely prioritize stabilizing supply chains and maintaining investor confidence to push private-sector expansion forward.
- What readers should watch: Monitor input costs and price pass-through, as inflationary pressure remains a challenge in meeting the cost environment.
How we got here
Saudi Arabia continues to diversify its economy under Vision 2030. Recent PMI readings from S&P Global and Riyad Bank indicate ongoing expansion in the non-oil private sector, driven by higher production and new orders, even as export markets face headwinds and oil-related activity remains weak.
Our analysis
Arab News reports on June BCI and PMI data, with GASTAT providing sector breakdowns in May–June. The coverage highlights domestic demand, industrial and services-sector optimism, and the ongoing drag from oil activity.
Go deeper
- What factors are driving the expansion in the non-oil private sector in June?
- How might ongoing regional tensions affect Saudi export demand in the coming months?
- Will price pressures constrain further gains in the non-oil economy?
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