RIYADH: Saudi Arabia’s non-oil activities saw a 2.2 percent increase in June compared to the previous month, signalling ongoing growth in the Kingdom’s efforts to diversify its economy.
According to the General Authority for Statistics, the Kingdom’s Industrial Production Index fell by 1.6 percent in June — a decrease attributed to the oil output reductions agreed upon by OPEC.
The year-on-year comparison showed an even sharper decline, with the IPI dropping 4 percent from June last year.
GASTAT defines the IPI as an economic indicator that measures changes in the volume of industrial output. It is calculated using data collected from industrial production surveys.
The authority noted an 11.3 percent decline in Saudi Arabia’s mining and quarrying activities in June compared to the same period in 2023.
The downturn is attributed to the Kingdom’s decision to reduce crude oil production as part of the OPEC+ agreement. To stabilize the global oil market, Saudi Arabia initially cut its oil output by 500,000 barrels per day in April 2023, with this reduction now extended through December 2024.
“Given the relative importance of the mining and quarrying activity, which accounted for 61.4 percent of the index weight, the trend of the mining and quarrying activity index dominates the overall trend of the industrial production index, followed by the manufacturing industry activity and electricity, gas, steam and air conditioning supply activities with a relative importance of 35 percent and 2.8 percent, respectively,” said GASTAT.
The report said that the sub-index for electricity, gas, steam and air conditioning supply activities increased by 10.2 percent in June compared to the same month of the previous year.
Additionally, water supply, sewerage, and waste management activities saw a year-on-year rise of 1.7 percent in June.
As Saudi Arabia continues to navigate its economic diversification goals under Vision 2030, the mixed performance in June’s industrial production data highlights the complexities of balancing non-oil sector growth with strategic oil production cuts.
While non-oil activities show promising growth, the overall industrial output remains sensitive to global oil market dynamics and production agreements.
