Saudi Arabia: Non-oil business activity improves marginally in February
March 5, 2018
The Purchasing Managers’ Index (PMI) sponsored by Emirates NBD and produced by IHS Markit rose from January’s all-time low of 53.0 in January to 53.2 in February. Therefore, the index remains above the 50-threshold that indicates expansion in business activity in the non-oil producing private sector.
February’s print suggested that the economy recovered somewhat from the introduction of value-added tax (VAT) on 1 January, with output growth accelerating compared to January’s print. New business, however, expanded at the slowest pace since the introduction of the survey in August 2009, amid weak demand from both domestic and foreign markets. While cost burdens moderated across the non-oil economy but remained in positive territory, selling prices declined for the first time in six months due to strong competitive pressures. Khatija Haque, Head of MENA Research at Emirates NBD, adds that, “While the pace of expansion in Saudi Arabia’s non-oil sector was slow by historical standards in February, firms were much more upbeat about prospects for the coming year, citing new project wins and stronger growth prospects. However, demand remained softer than in Q4 2017, prompting firms to cut selling prices last month by the most since the survey began in August 2009.”
Saudia Arabia Fixed Investment Forecast
FocusEconomics Consensus Forecast panelists see fixed investment rising 2.9% in 2018, which is down 0.6 percentage points from last month’s estimate. For 2019, the panel expects fixed investment to increase 4.8%.