RIYADH: Saudi Arabia’s non-oil private sector returned to expansion in April, with the Riyad Bank Purchasing Managers’ Index rising to 51.5 from 48.8 a month earlier, signaling a modest recovery.
Business activity and new orders rebounded after a contraction in March, as firms reported stronger domestic demand and an increase in client numbers, according to data compiled by S&P Global.
The Kingdom’s PMI fell below 50 in March, as Iran’s retaliatory strikes across the Gulf caused the biggest business disruption in the region since the COVID-19 pandemic, leading to airport closures, halted port operations, and sharp swings in financial markets.
Naif Al-Ghaith, chief economist at Riyad Bank, said the figure “signals a constructive and resilient trajectory for the Kingdom’s non-oil sector, reinforcing the broader narrative of economic diversification under Vision 2030.”
He added: “With the headline PMI rising to 51.5, the sector has returned to expansion territory following a temporary dip in March, indicating that underlying business conditions remain fundamentally strong despite external headwinds.”
Developing a robust non-oil ecosystem remains central to Saudi Arabia’s Vision 2030 strategy, as the Kingdom continues its efforts to diversify its economy and reduce reliance on crude revenues.
According to the report, output expanded in April as firms progressed on existing projects and saw a mild pickup in client demand.
S&P Global, however, added that the rate of sales growth remained relatively mild, with delays in client spending and investment decisions reportedly offsetting gains.
The overall rate of business expansion also continued to be dampened by deferrals in client spending decisions amid the Middle East conflict, while shipping disruptions continued to impact supply chains.
“Operationally, supply chain dynamics remain a key area of focus. Delivery times lengthened during the month, prompting some firms to build inventories as a precautionary measure. While this reflects short-term logistical challenges, it also indicates proactive business behavior and forward planning,” added Al-Ghaith.
The April survey also indicated that there was a substantial increase in cost burdens among non-oil companies in the Kingdom.
Increases in raw material prices and transportation costs resulted in the steepest rise in business expenses since the survey began nearly 17 years ago.
Regarding the future outlook, non-oil firms in Saudi Arabia expressed optimism, driven by factors including longer-term expansion and domestic infrastructure development plans.
“Looking forward, sentiment remains constructive. The Future Output Index indicates that firms expect activity to strengthen over the next 12 months. The combination of resilient domestic demand, improving business activity, and forward-looking optimism reinforces confidence in Saudi Arabia’s economic transformation,” said Al-Ghaith.
He concluded by saying that the underlying fundamentals for non-energy firms in Saudi Arabia remain robust, positioning the Kingdom for continued non-oil growth and long-term economic stability going forward.
In February, the General Authority for Statistics reported that Saudi Arabia’s real gross domestic product expanded by 4.5 percent year on year in 2025, driven by strong growth in both oil and non-oil activities.
It added that non-oil activities in the Kingdom grew by 4.9 percent in 2025 compared with the previous year.
Flash estimates from GASTAT in April showed that the Kingdom’s real GDP expanded by 2.8 percent in the first quarter of 2026 compared with the same period in 2025, primarily driven by gains in non-oil activities.
