Saudi Arabia’s private sector is beginning to see signs of a gradual recovery, with non-oil PMI rising for the second consecutive month in October, Jadwa Investment says in its latest monthly Chartbook for the Saudi economy.
POS transactions in Saudi Arabia rose by almost 34 percent year-on-year in October, and by 1.3 percent month-on-month. The sectors seeing the biggest declines are “education” and “hotels,” while both the “food and beverages” sector and “restaurants and cafes” saw the largest rises, year-on-year, Jadwa notes.
Inflation in the Kingdom continued to tick upward. Prices in October rose by 5.8 percent year-on-year, and by 0.1 percent month-on-month, affected by continuous yearly rises in “food and beverages.” Prices in all groups were up year-on-year except for “education” (down 8.6 percent year-on-year), and ‘housing and utilities’ (down 0.7 percent year-on-year).
Saudi Arabia’s foreign reserves (SAMA FX) declined by almost $1 billion month-on-month in October, to stand at $446.6 billion. According to Jadwa, a breakdown of SAMA FX reserves shows that while there was a monthly increase in SAMA’s foreign securities by $6.4 billion, bank deposits saw a decline by $7.4 billion during the month.
Even with Saudi Arabia’s progress on economic diversification plans, a recovery in the price of oil will accelerate those plans and provide a stronger recovery for the Saudi economy after a year that saw the price of oil collapse and a pandemic ravage the global economy. Saudi crude oil production averaged 9 million barrels per day (mbpd) in October, showing no change on a monthly basis, and in-line with OPEC+ agreed output levels.
Jadwa said it expects output to remain at current levels until the end of 2020, thereby pushing average Saudi crude oil production to 9.2 mbpd in full year 2020.
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