Saudi Arabia’s Industrial Production Index (IPI) rose by 1.6% in July 2024 compared to the same month in 2023. This growth was driven by increased activity in manufacturing, electricity, gas, steam, air conditioning supply, and water-related services.
Manufacturing Sector Boosts Growth
The General Authority for Statistics (GASTAT) reported that the manufacturing sub-index saw a significant rise of 4.6% year-on-year. This increase was largely due to heightened production in chemical products and food items, which surged by 5.7% and 10.1%, respectively. The robust growth in manufacturing aligns with Saudi Arabia’s Vision 2030 goals, which aim to diversify the economy and reduce reliance on oil.
Decline in Mining and Quarrying
Conversely, the mining and quarrying sub-index experienced a decline of 0.8% in July 2024. This drop is attributed to Saudi Arabia’s decision to cut oil production to 8.9 million barrels per day, following agreements with OPEC+. As a result, the index for oil activities fell by 1.1% compared to the previous year. However, non-oil activities showed resilience, increasing by 8.2% during the same period.
Growth in Utility Services
GASTAT added that utility services also contributed to the overall IPI increase. The electricity, gas, steam, and air conditioning supply sub-index recorded a notable 8.2% rise, while water supply, sewerage, waste management, and remediation services grew by 1.1%.
Month-on-Month Trends
On a month-to-month basis, manufacturing activity increased by 1.7% in July, driven by a 3.3% rise in the production of coke and refined petroleum products. Mining and quarrying activities also saw a 1.3% increase compared to June. The index for both oil and non-oil activities rose by 1.6% and 1.8%, respectively.
The IPI serves as a crucial economic indicator, reflecting the Kingdom’s industrial growth and its ongoing efforts to diversify its economy. The data, collected through the Industrial Production Survey, highlights the mixed trends in Saudi Arabia’s industrial sector, with robust growth in manufacturing and utilities offsetting declines in mining and oil production.