PMI: Saudi Non-oil Private Sector Output Highest Since 2017

FILE PHOTO: Cars drive past the King Abdullah Financial District in Riyadh, Saudi Arabia, November 12, 2017. REUTERS/Faisal Al Nasser
FILE PHOTO: Cars drive past the King Abdullah Financial District in Riyadh, Saudi Arabia, November 12, 2017. REUTERS/Faisal Al Nasser
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PMI: Saudi Non-oil Private Sector Output Highest Since 2017

FILE PHOTO: Cars drive past the King Abdullah Financial District in Riyadh, Saudi Arabia, November 12, 2017. REUTERS/Faisal Al Nasser
FILE PHOTO: Cars drive past the King Abdullah Financial District in Riyadh, Saudi Arabia, November 12, 2017. REUTERS/Faisal Al Nasser

Saudi Arabia's non-oil private sector notched a 14th month of consecutive growth in October as output expanded at the fastest rate since December 2017, signaling the sector's continued strengthening, a survey showed on Wednesday.

The seasonally adjusted IHS Markit Saudi Arabia Purchasing Managers' Index (PMI) fell to 57.7 in October from 58.6 in September but remained well above the 50.0 mark that separates growth from contraction.

"October PMI data showed the non-oil sector recovering at a rapid pace. Growth in output was the strongest seen for nearly four years, driven by a marked rise in client demand as the lifting of COVID-19 restrictions continued to boost economic activity," said David Owen, economist at survey compiler IHS Markit.

Non-oil private firms in Saudi Arabia continued to have a positive outlook for future business, with hopes pinned on expectations of further improvement in demand. The sentiment was the second highest of the year but slightly weaker than in September.



After Trump’s Victory, Arab Demands for Competitive Advantages Due to Regional Tensions

Donald Trump addresses his supporters at the West Palm Beach Convention Center in Florida on Wednesday. (EPA)
Donald Trump addresses his supporters at the West Palm Beach Convention Center in Florida on Wednesday. (EPA)
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After Trump’s Victory, Arab Demands for Competitive Advantages Due to Regional Tensions

Donald Trump addresses his supporters at the West Palm Beach Convention Center in Florida on Wednesday. (EPA)
Donald Trump addresses his supporters at the West Palm Beach Convention Center in Florida on Wednesday. (EPA)

With the election of Donald Trump as US president, the global economy has gained direction for the coming years. Trump’s policies favor corporate tax cuts, increased investment, and expansionary monetary policies. He also promotes local production to boost job creation, which involves imposing significant tariffs on trade partners, particularly in Asia. This approach could trigger a trade war, affecting inflation in both the US and worldwide.

The US economy is already grappling with high prices, slower economic growth, and rising unemployment, alongside a national debt nearing 99% of GDP. This backdrop underscores the importance of economic issues in the recent election.

For the new US administration, domestic concerns will not be the sole priority. Ongoing geopolitical tensions, especially recent Middle Eastern conflicts, will also impact the US economy. To gain regional insights, Asharq Al-Awsat consulted economists from various Arab nations on their expectations and requests from the US president regarding the Middle East.

Priority of Regional Stability

Dr. Mohamed Youssef, an Egyptian economist, emphasized that regional stability is crucial, benefiting the economy and paving the way for resolving complex issues like the Nile Dam dispute affecting Egypt. He highlighted the American role in fostering calm in the region.

Iraqi economist Durgham Mohamed Ali noted that US relations vary across the Middle East; while Lebanon and Yemen remain outside current US alliances, Sudan and Somalia require international aid to rebuild infrastructure.

Competitive Advantage for Arab Countries

Ahmed Moaty, a global markets expert from Egypt, suggested that reduced US tariffs would improve Arab economies’ competitiveness. However, he pointed out the American high debt could motivate the administration to impose tariffs to protect local industries and reduce imports. Ali observed that US tariffs are interest-driven and selective, favoring allies like Japan, Taiwan, and South Korea while being stringent toward BRICS members, such as China, Brazil, and South Africa. He linked tariff policies to regional geopolitics, especially the conflicts involving Israel, Lebanon, Palestine, and Iran, which could influence US economic decisions.

Dr. Mohamed Youssef also argued that easing US-China competition could benefit the global economy, as high tariffs on Chinese goods reduce China’s growth, decreasing demand for key commodities like oil.

Ibrahim Al-Nwaibet, CEO of Saudi Arabia’s Value Capital, predicted that a Republican win could positively impact oil and interest rates, revitalizing the petrochemical and trade finance sectors.

On currency, Moaty noted the strong US dollar pressures emerging markets, especially in the Middle East. He suggested offering US Treasury bonds with higher yields to Arab countries as a counterbalance. Ali added that the dollar’s strength poses challenges for countries heavily reliant on US currency amid global liquidity shortages.

The BRICS Bloc

Ali also mentioned the high levels of US debt, explaining: “In general, the entire world is concerned about rising US debt, slowing growth rates... and is wary of the BRICS alliance, which some Arab countries hope to join. The question remains whether a cold economic war will ensue.”

Youssef also discussed the BRICS, which could play a role in attracting the new US president’s attention to countries joining the alliance. He added: “This may provide new competitive advantages for countries in the region, particularly as countries like Egypt, the UAE, and Iran recently joined BRICS, while Saudi Arabia is still evaluating the benefits of such move.”