An international survey revealed that the non-oil private sector in Saudi Arabia returned to growth last September for the first time in seven months. This is amid an increase in demand after easing the general lockdown measures.
“Business activity in the Saudi Arabia non-oil private sector ticked up in September; supported by a return to sales growth as the economy started to find its footing after the COVID-19 lockdown,” said David Owen, economist at IHS Markit.
The IHS Markit Saudi Arabia Purchasing Managers’ Index (PMI) rose to 50.7 from 48.8 in August; surpassing the 50 mark that separates growth from contraction for the first time since February. This is prior to the outbreak of the Covid-19 pandemic.
“In addition, the impact of a rise in VAT notably softened, after a sharp rise in prices and a dip in sales in August. Cost inflation eased to just a marginal pace,” Owen added.
Saudi Arabia, the world’s largest oil exporter, tripled the value-added tax last July from 5 percent to 15 percent; in an effort to support state treasury affected by the decline in oil prices and cuts in crude production; reflected in business conditions last August.
Saudi Arabia last week announced that the economy had contracted by 7 percent.
The Saudi economy still has “some way to go to fully recover,” Owen underlined, adding; “Output growth remains well below normal, and jobs are still falling, albeit at a slower rate. Firms will require consistent rises in sales to support a strong end to the year.”