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Saudi IPI Records Highest Growth in 3 Years

A general view of Riyadh, Saudi Arabia. (Reuters)
A general view of Riyadh, Saudi Arabia. (Reuters)
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Saudi IPI Records Highest Growth in 3 Years

A general view of Riyadh, Saudi Arabia. (Reuters)
A general view of Riyadh, Saudi Arabia. (Reuters)

The Saudi Industrial Production Index (IPI) recorded its highest growth in three years, reaching 11.1 percent last January on an annual basis, according to official data.

The General Authority for Statistics indicated that the increase in the annual growth rate is a clear indication of the recovery of industrial production in the country.

The increase of industrial production resulted mainly from higher output in the three sub-sectors, mining and quarrying, manufacturing, and electricity and gas supply.

Taking a longer-term view, the growth of the IPI turned positive in May 2021 after a long period of negative growth rates in 2019 and 2020, partly impacted by the effects of the worldwide pandemic.

Since mid-2021, the IPI growth showed a positive trend, accelerating at the end of 2021.

In January 2022, mining and quarrying grew by 11.4 percent compared to January 2021 as Saudi Arabia increased its oil production to its highest level by more than 10 million barrels per day in January 2022.

Manufacturing grew by 9.7 percent, and electricity and gas supplies by 15.7 percent.

Meanwhile, Saudi Central Bank (SAMA) extended the Guaranteed Financing Program - one of SAMA's Private Sector Financing Support Programs - for one more year until March 14, 2023, for micro, small and medium enterprises (MSMEs)

The extensions are consistent with SAMA's mandate of promoting financial sector stability, supporting economic growth, enhancing the Saudi Central Bank's support to MSMEs growth, and overcoming challenges from COVID-19 preventive measures.

MSMEs can benefit from the Guaranteed Financing Program through banks and financing companies that are subject to the supervision of the Saudi Central Bank and are members of the Small & Medium Enterprises Funding Guarantee Program "Kafalah."

Since its launch on March 14, 2020, the Program has benefited more than 13,000 contracts with a total financing value exceeding $2.9 billion.

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IMF: Middle East Conflict Escalation Could Have Significant Economic Consequences

Displaced families, mainly from Syria, gather at Beirut's central Martyrs' Square, where they spent the night fleeing the overnight Israeli strikes in Beirut, Lebanon September 28, 2024. REUTERS/Louisa Gouliamaki
Displaced families, mainly from Syria, gather at Beirut's central Martyrs' Square, where they spent the night fleeing the overnight Israeli strikes in Beirut, Lebanon September 28, 2024. REUTERS/Louisa Gouliamaki
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IMF: Middle East Conflict Escalation Could Have Significant Economic Consequences

Displaced families, mainly from Syria, gather at Beirut's central Martyrs' Square, where they spent the night fleeing the overnight Israeli strikes in Beirut, Lebanon September 28, 2024. REUTERS/Louisa Gouliamaki
Displaced families, mainly from Syria, gather at Beirut's central Martyrs' Square, where they spent the night fleeing the overnight Israeli strikes in Beirut, Lebanon September 28, 2024. REUTERS/Louisa Gouliamaki

The International Monetary Fund said on Thursday that an escalation of the conflict in the Middle East could have significant economic ramifications for the region and the global economy, but commodity prices remain below the highs of the past year.

IMF spokesperson Julie Kozack told a regular news briefing that the Fund is closely monitoring the situation in southern Lebanon with "grave concern" and offered condolences for the loss of life.

"The potential for further escalation of the conflict heightens risks and uncertainty and could have significant economic ramifications for the region and beyond," Kozack said.

According to Reuters, she said it was too early to predict specific impacts on the global economy, but noted that economies in the region have already suffered greatly, especially in Gaza, where the civilian population "faces dire socioeconomic conditions, a humanitarian crisis and insufficient aid deliveries.

The IMF estimates that Gaza's GDP declined 86% in the first half of 2024, Kozack said, while the West Bank's first-half GDP likely declined 25%, with prospects of a further deterioration.

Israel's GDP contracted by about 20% in the fourth quarter of 2023 after the conflict began, and the country has seen only a partial recovery in the first half of 2024, she added.
The IMF will update its economic projections for all countries and the global economy later in October when the global lender and World Bank hold their fall meetings in Washington.
"In Lebanon, the recent intensification of the conflict is exacerbating the country's already fragile macroeconomic and social situation," Kozack said, referring to Israel's airstrikes on Hezbollah in Lebanon.
"The conflict has inflicted a heavy human toll on the country, and it has damaged physical infrastructure."
The main channels for the conflict to impact the global economy have been through higher commodity prices, including oil and grains, as well as increased shipping costs, as vessels avoid potential missile attacks by Yemen's Houthis on vessels in the Red Sea, Kozack said. But commodity prices are currently lower than their peaks in the past year.
"I just emphasize once again that we're closely monitoring the situation, and this is a situation of great concern and very high uncertainty," she added.
Lebanon in 2022 reached a staff-level agreement with the IMF on a potential loan program, but there has been insufficient progress on required reforms, Kozack said.
"We are prepared to engage with Lebanon on a possible financing program when the situation is appropriate to do so, but it would necessitate that the actions can be taken and decisive policy measures can be taken," Kozack added. "We are currently supporting Lebanon through capacity development assistance and other areas where possible."