Saudi Annual Growth and Non-Oil Expansion Rises in Second Quarter
Annual economic growth in Saudi Arabia reached 2.7 percent in Q2, a marked improvement from weak performance recorded in the last six months. Non-oil expansion remained strong and the oil sector’s decline slower, according to recent government data.
Saudi remains the leading oil exporter in the world despite declining GDP growth in the last two fiscal quarters. Only 2.1 percent growth was reported in the quarter spanning January to March, a weak performance not seen since 2010 and resulting from poor figures in the crude sector.
Real GDP in Saudi Arabia increased by 5.5 percent from April to June of 2012, and grew a further 5.2 percent in the entire year.
Comparing quarter to quarter from 2012 to 2013, the January to March time period grew 2.7 percent in 2013, but the April to June period dropped by 1.1 percent this year.
The riyal remains pegged to the US dollar. Economic performance in the kingdom has fallen several times since 2010.
Growth remains linked to crude oil output, as well as energy prices and government spending. Spending by the Saudi government has risen significantly in the last ten years.
Oil sector output, accounting for almost half of the $711bn economy, dropped 3.7 percent y-o-y in Q2, a smaller decrease than the 6.3 percent reported in January to March, according to Central Department of Statistics data. Oil sector output rose 9.6 percent back in April to June of 2012.
Oil exports in Saudi Arabia averaged 9.3mn bpd in the first six months of 2013, a decline of 0.6mn from the same period in 2012, based on government data.
Non-oil private sector growth decreased 4.2 percent during the April to June period, compared to expansion of 4.3 percent from January to March of 2013.
According to a Reuters’ poll of analysts, forecasts for economic growth in Saudi Arabia come in at 4.1 percent for 2013, declining slightly to 4.0 percent the following year.
Business Activity in Saudi Arabia Reaches High in August
Non-oil private business activities in the kingdom have reached a 4-month high this past August, as both new orders and output rose, according to a recent report by HSBC and SABB.
The Saudi Arabia PMI from SABB and HSBC reflects the economic performance of the kingdom’s non-oil private sector firms. The study monitors several variables, including employment, prices, orders, stocks and output.
The most recent survey results indicated further improvement within Saudi’s non-oil operating conditions.
The headline PMI climbed to a high not seen in four months, reaching 57.5 in August and rising from the July result of 56.6. Improved operating conditions have been reported each month of the survey to date.
Output rose at a faster pace during August, with 22 percent of respondents reporting higher levels of activity. Many respondents reported that increased business drove the recent expansion.
Order intakes also rose significantly, following the pattern of stronger output growth.
Market conditions partially affected the most recent increase, as did greater sales and marketing efforts.
Input prices rose at a marked rate, affected by rising purchase prices and higher staff costs. Based on anecdotal evidence, the purchase price increase was partially driven by higher levels of market demand and general economic pressures. Contrasting the rapid increase in input costs, Saudi’s non-oil private firms dropped their charges when faced with increased market competition.
Selling prices dropped for the second month in a row, and at a high rate.
Once again, employment levels were up in August. Firms that increased their hiring also often reported higher levels of production requirements.
Work backlogs accumulated at a rapid pace in the 18-month period, as nearly 12 percent of panel members indicated greater amounts of uncompleted work. Many panelists connected the higher levels of incomplete orders to greater business activities.
A rise in sales continued to be named as the main driver for greater levels of purchasing activities in the kingdom’s non-oil private sector firms. July marked the latest increase of this kind.
Delivery times shrank in August. Respondents often credited this improvement to higher levels of market competition.
Qatar Pulls In Fourth for Asset Wealth Per Head
Qatar claims the fourth highest asset wealth per head, growing 8.4 percent from 2011 to 2012. Qatar also claimed the highest levels of growth, according to the recently published Global Built Asset Wealth Index.
The Index compares 31 nations, representing 82 percent of global GDP. According to the Index, overall built asset wealth in the group of countries totaled $193 trillion, or nearly three times the $68tr GDP of those nations.
Figures for Qatar indicate lower levels of built assets than many other nations in the global ranking. However, the built asset wealth per person indicates the potential for built asset wealth to shape living standards and Qatar ranks fourth in terms of built asset wealth per person at $143,000 each.
Qatar’s built asset wealth per person swelled by 8.4 percent from 2011 to 2012, the highest result in the survey.
The Middle East, Africa and Asia are expected to experience rapid growth in the coming decade. Built asset stock in Africa and the Middle East is expected to increase by 63 percent by 2022, reaching $8.7 trillion. The built asset stock in Asia is also expected to increase by 62.9 percent, going from $84 trillion to $137.4 trillion by 2022.
Qatar currently comes in near the bottom for asset wealth, with a result of $0.3 trillion, much lower than China and the US and just below the UAE.
Qatar remains committed to developing the nation’s social infrastructure, including educations, hospitals and housing, putting it above many other nations and allowing for sustainability and benefits to the population.Paul Holdsworth, Staff Writer, Gulf Jobs Market News