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Saudi Arabia’s Non-oil Activity Rises to Highest Level in 8 Years

Non-oil activity increased due to a strong rise in demand and a positive economic outlook. (Asharq Al-Awsat)
Non-oil activity increased due to a strong rise in demand and a positive economic outlook. (Asharq Al-Awsat)
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Saudi Arabia’s Non-oil Activity Rises to Highest Level in 8 Years

Non-oil activity increased due to a strong rise in demand and a positive economic outlook. (Asharq Al-Awsat)
Non-oil activity increased due to a strong rise in demand and a positive economic outlook. (Asharq Al-Awsat)

Non-oil private business activity in Saudi Arabia rose to an 8-year high in February, supported by a strong increase in demand and a positive economic outlook. The Kingdom’s Purchasing Managers Index hit 59.8, up from 58.2 in January, at the fastest rate of increase since March 2015.

Sunday’s survey showed that the large rise in new orders indicates an improvement in the economic conditions of companies. The new orders sub-index rose to 68.7 last month, the highest reading in more than eight years, from 65.3 in January, extending a recent upward trend and building strong demand momentum.

As a result, the output sub-index registered a strong increase, reaching 65.6 in February from 63.6 in the previous month, which led to further expansion in hiring and purchasing.

Naif Alghaith, chief economist at Riyad Bank, said that despite the tightening of monetary conditions, the balance of supply and demand seemed strong and driven by ongoing projects across the Kingdom, which led to a sharp rise in production and new orders for companies, in addition to an increase in the demand for labor.

However, the strong improvement in demand in February has pushed inflationary pressures higher.

“Prices have responded to the surge in demand, with the increase in input costs evident especially in the services and construction sectors. To that end, we maintain our inflation forecast just below 3 percent, amid the ongoing cost pressures and the current elevated demand that we believe will continue in the medium term,” Alghaith noted.

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EU Seeks Unity in First Strike Back at Trump Tariffs

FILE PHOTO: An EU flag flutters. Reuters
FILE PHOTO: An EU flag flutters. Reuters
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EU Seeks Unity in First Strike Back at Trump Tariffs

FILE PHOTO: An EU flag flutters. Reuters
FILE PHOTO: An EU flag flutters. Reuters

European Union countries will seek to present a united front in the coming days against US President Donald Trump's tariffs, likely approving a first set of targeted countermeasures on up to $28 billion of US imports from dental floss to diamonds.
Such a move would mean the EU joining China and Canada in imposing retaliatory tariffs on the United States in an early escalation of what some fear will become a global trade war, making goods more expensive for billions of consumers and pushing economies around the world into recession, Reuters said.
The 27-nation bloc faces 25% import tariffs on steel and aluminium and cars and "reciprocal" tariffs of 20% from Wednesday for almost all other goods.
Trump's tariffs cover some 70% of the EU's exports to the United States - worth in total 532 billion euros ($585 billion) last year - with likely duties on copper, pharmaceuticals, semiconductors and timber still to come.
The European Commission, which coordinates EU trade policy, will propose to members late on Monday a list of US products to hit with extra duties in response to Trump's steel and aluminium tariffs rather than the broader reciprocal levies.
It is set to include US meat, cereals, wine, wood and clothing as well as chewing gum, dental floss, vacuum cleaners and toilet paper.
One product that has received more attention and exposed discord in the bloc is bourbon. The Commission has earmarked a 50% tariff, prompting Trump to threaten a 200% counter-tariff on EU alcoholic drinks if the bloc goes ahead.
Wine exporters France and Italy have both expressed concern. The EU, whose economy is heavily reliant on free trade, is keen to make sure it has wide backing for any response so as to keep the pressure up on Trump ultimately to enter negotiations.
Luxembourg will earlier on Monday host the first EU-wide political meeting since Trump's announcement of the sweeping tariffs when ministers responsible for trade from the 27 EU members will exchange views on the impact and how best to respond.
EU diplomats said the main aim of the meeting was to emerge with a united message of a desire to negotiate with Washington a removal of tariffs, but a readiness to respond with countermeasures if that failed.
"Our biggest fear after Brexit was bilateral deals and a break of unity, but through three or four years of negotiations that did not happen. Of course, here you have a different story, but everyone can see an interest in a common commercial policy," one EU diplomat said.
COUNTER-TARIFFS
Among EU members, there is a spectrum of opinion on how to respond. France has said the EU should work on a package going well beyond tariffs and French President Emmanuel Macron has suggested European companies should suspend investments in the United States until "things are clarified".
Ireland, almost a third of whose exports go to the United States, has called for a "considered and measured" response, while Italy, the EU's third largest exporter to the US, has questioned whether the EU should hit back at all.
"It's a difficult balance. Measures cannot be too soft to bring the United States to the table, but not too tough to lead to escalation," one EU diplomat said.
Talks with Washington to date have not borne fruit. EU trade chief Maros Sefcovic described his two-hour exchange with US counterparts on Friday as "frank" as he told them US tariffs were "damaging, unjustified".
The initial EU counter-tariffs will in any case be put to a vote on Wednesday and will be approved except in the unlikely event that a qualified majority of 15 EU members representing 65% of the EU's population oppose it.
They would enter force in two stages, a smaller part on April 15 and the rest a month later.
Commission President Ursula von der Leyen will also hold separate discussions on Monday and Tuesday with chief executives from the steel, automotive and pharmaceutical sectors to assess the impact of tariffs and determine what to do next.