Saudi Arabia’s non-oil activities increased by 2.2% in June compared to the previous month. This growth reflects the Kingdom’s ongoing efforts to diversify its economy.
According to the General Authority for Statistics (GASTAT), the Industrial Production Index (IPI) fell by 1.6% in June. This decrease is linked to the oil output reductions agreed upon by OPEC.
The IPI showed a sharper year-on-year decline, dropping by 4% from June 2023. The IPI measures changes in the volume of industrial output, calculated from industrial production surveys.
Impact of Reduced Oil Production
Saudi Arabia’s mining and quarrying activities dropped by 11.3% in June compared to the same period in 2023. This decline resulted from the Kingdom’s decision to reduce crude oil production under the OPEC+ agreement.
To stabilize the global oil market, Saudi Arabia reduced its oil output by 500,000 barrels per day in April 2023. This reduction will continue through December 2024.
GASTAT noted that mining and quarrying activities account for 61.4% of the IPI’s weight. This sector’s trend heavily influences the overall IPI, followed by manufacturing and electricity, gas, steam, and air conditioning supply activities.
Increase in Electricity and Utilities
The sub-index for electricity, gas, steam, and air conditioning supply activities rose by 10.2% in June year-on-year. Water supply, sewerage, and waste management activities also saw a 1.7% increase in the same period.
Furthermore, Saudi Arabia’s non-oil sector sustained its growth trajectory in the first quarter of 2024. GASTAT reported a robust 3.4% expansion during this period. This positive trend underscores the Kingdom’s ongoing efforts to diversify its economy and reduce reliance on oil revenues.
