Worries about the Omicron effects shattered Saudi company confidence in December, resulting in a sharp reduction in new orders. As optimism about future growth fell to an 18-month low, hiring activity in the Saudi private sector slowed.
According to the latest PMI data from IHS Markit, the research organization that measures monthly private sector activity, Omicron wasn’t the only factor scaring business owners, with faster-than-expected inflation and competition adding to their fears. “The most recent statistics showed particularly steep slowdowns in new order growth across manufacturing and services, with panelists frequently mentioning canceled bookings and decreased client demand.”
The fact that new business from overseas increased at the “weakest rate since April” added to the pessimism. As a result of all of this, the PMI (Purchasing Managers Index) fell three points to 53.9 in December. This is the lowest monthly number since March of last year, but it still reflects a “strong improvement in operating conditions across the economy’s non-oil sector.”
According to Owen, “The slower pace of economic recovery prompted firms to offer a weaker projection for future output.”
Saudi Arabia is the most populous country in the Gulf area, with a population of 33 million people, and the Arab World’s largest economy, with a GDP of $ 782 billion dollars. Within the region, it is the only G-20 member. The Saudi Arabian Government (SAG) is in charge of the country’s oil-based economy’s key economic activities.
Saudi Arabia contains almost 16 percent of the world’s proven petroleum reserves, is a major player in OPEC, is a major producer and exporter of petroleum, and maybe a large-scale oil refiner and gas producer. Petroleum provides for around 87 percent of budget revenues, 32 percent of GDP, and 81 percent of export earnings, according to Forbes Magazine.
SAG established Vision 2030, a vast and ambitious socio-economic reform plan, in 2016 to diversify its economy away from oil. The goal of the initiative is to diversify the economy, provide jobs in the private sector for a growing population, and stabilize government finances.
The most important goals and targets in Vision 2030 are: promoting private-sector growth; increasing local content requirements in manufacturing, particularly in defense equipment and basic materials; improving Saudi government efficiencies; increasing revenue generation through new taxes; transforming the Public Investment Fund (PIF) into the world’s largest sovereign wealth fund; providing affordable housing to citizens; and developing Saud Arabia.
To date, the SAG isn’t on pace to succeed in the Vision 2030 goals by 2030 but it’s moving in a positive direction.