RIYADH: Saudi Arabia’s manufacturing activity surged by 8.7 percent in July compared to the same period the previous year, as indicated by the latest report from the General Authority for Statistics.
The report highlighted a 21 percent increase in electricity and supplies for July year-on-year.
However, the Industrial Production Index witnessed a 9.5 percent decline in July 2023 compared to July 2022 when it had posted a 17.7 percent gain.
“Although the activity of the manufacturing industry and the activity of electricity and gas supply continued to rise, the decline in the mining and quarrying activity during July 2023 led to the decrease in the general index, given its high weight in the index,” stated the report.
The IPI’s trajectory has been declining since May, when it registered a 1.2 percent decrease, marking the first drop of the year. In contrast, it began the year on a positive note with a 6.8 percent rise in January.
Compared to the annual IPI growth recorded in 2022, which saw an impressive 26.7 percent increase in April, this year’s overall performance has been less impressive. The IPI is largely influenced by the trends in the mining and quarrying, manufacturing, and electricity and gas supply sectors, with respective weights of 74.5 percent, 22.6 percent, and 2.9 percent.
“Thus, the trend of the industrial production index in the mining and quarrying sector dominates the trend in the general IPI,” added the report.
As a result, the decline in these activities has had a significant impact on industrial growth, leading to the index’s downturn since May.
Additionally, Saudi Arabia’s reduction in oil production to 9 million barrels per day in July resulted in a 16.7 percent drop in mining and quarrying activities compared to the same period the previous year.
Compared to June, the overall IPI decreased by 6.5 percent. This decline was primarily driven by significant drops in the mining and quarrying sector, which decreased by 9.5 percent, and the manufacturing sector, which saw a 1 percent decline.
On the other hand, electricity and gas supplies increased by 11 percent, but due to their lower weight in the index, their impact remained limited.
