Non-oil Private Sector Growth Boosts Saudi Arabia's Economic Expansion
Saudi Arabia's non-oil private sector continued to witness steady improvements in operating conditions during May, mainly driven by an expansion in new business and a recovery in customer demand.
This strong performance underscores the resilience of Saudi Arabia's non-oil economy and its capacity to achieve sustainable growth.
The Riyad Bank Purchasing Managers' Index (PMI) rose in May, reaching 55.8 points, indicating a strong improvement in business conditions, though still below the peak recorded earlier this year.
These positive figures reflect growing confidence in the sector's future, with output expectations reaching an 18-month high, signaling operational readiness for continued growth in the second half of the year.
Key findings of the PMI show a notable acceleration in new order growth during May, following a slowdown in April. Companies attributed this increase to stronger demand, robust sales performance, and new marketing initiatives. New orders from abroad also grew, although at the slowest pace in the past seven months.
This positive momentum was mirrored in employment levels, as companies increased their workforce to meet rising production requirements, marking one of the fastest hiring rates in over a decade.
The workforce growth was accompanied by a surge in purchasing activity, which saw its fastest rise since March 2024, reflecting improved supply chain flexibility.
The Kingdom's non-oil private sector is showing strong confidence in the future, with business expectations reaching their highest level since late 2023.
Business activity rose in May, driven by increased customer demand and production needs, although the overall rate of growth was the slowest since last September. The construction sector played a key role in this growth, recording the strongest increases in both activity and new business.
Despite this strong performance, non-oil firms faced a sharp rise in input costs during May. However, inflation slowed compared to April due to reduced wage pressures.
Conversely, selling prices declined in May, driven by a sharp drop in service sector prices, with companies citing competitive pressures impacting their pricing power.
Commenting on these results, Dr. Naif Al-Ghaith, Chief Economist at Riyad Bank, affirmed that Saudi Arabia's non-oil economy maintained its strong momentum in May.
He noted that improving demand, robust economic activity, the launch of new projects, and increased labor productivity all contributed to continued growth, despite the pace slowing to its lowest level since September 2024.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Arab News
an hour ago
- Arab News
MENA startup funding grows in May as Egypt rebounds
RIYADH: Startups across the Middle East and North Africa secured $289 million across 44 deals in May, marking a 25 percent rise from April and a 2 percent increase year-on-year. While equity dominated the deal flow, debt financing represented just 9 percent of the total. Egypt led regional fundraising with $125 million, bolstered by Nawy's $75 million round and seven other deals totaling $50 million. The UAE followed with $86.7 million from 14 deals, while Saudi Arabia came third with $69 million from 15 transactions. Kuwait made a rare appearance in the top four, with two startups securing a combined $6 million. Despite the hype around artificial intelligence, fueled by a high-profile visit from US President Trump and Silicon Valley executives, funding in the sector was limited. AI startups attracted just $25 million across two deals, underscoring a gap between public narrative and private capital flows. Fintech maintained its lead among sectors, drawing $86.5 million through 14 rounds. Property technology followed, lifted by Nawy, while media technology firms raised $32 million. Construction technology firm WakeCap raised $28 million, one of the few notable later-stage rounds. Early-stage funding dominated the month, accounting for $161 million, with just one pre-series C deal recorded at $12 million. Business-to-business startups continued to command investor attention, raising $157 million across 29 deals. Hybrid startups secured $79 million, while B2C companies collected $53 million. The gender gap in startup funding persisted, with male-founded teams receiving 82 percent of capital, compared to 7 percent for women-led firms and 11 percent for mixed-gender teams. Stride Ventures doubles down on GCC with Saudi expansion Stride Ventures, a global venture debt firm, is deepening its presence in the Gulf Cooperation Council, centering its growth strategy on Saudi Arabia. The firm announced the opening of a second regional office, the doubling of its local team, and the release of the inaugural Global Venture Debt Report 2025, developed in partnership with Kearney. The report reveals that the GCC's venture debt market has grown at a compound annual growth rate of 54 percent—quadruple the global average—reaching $500 million in 2024 from $60 million in 2020. As part of its regional ambitions, Stride aims to triple its assets under management in the GCC by 2026 and is targeting $500 million in commitments over the next three to five years. 'Saudi Arabia is shaping the future of venture capital and private credit with intention and scale,' said Fariha Javed, partner at Stride Ventures, adding: 'We are seeing a new generation of founders who understand the value of non-dilutive capital to scale responsibly and an equally ambitious set of investors in the region ready to fuel their growth.' Javed said that Saudi Arabia is moving from being a capital source to becoming a capital magnet. Badir Fund backs Shorooq's Nahda Fund II to unlock SME credit The UAE-based Arab Fund for Economic and Social Development has committed capital to Shorooq Partners' Nahda Fund II through its Badir Fund for small and medium-sized enterprises. Founded in 2017, Shorooq is known for offering structured financing to growth-stage companies. Recent recipients include fintech firm Abhi and self-storage platform The Box, which received $15 million and $12.5 million in debt financing, respectively. 'This collaboration with the Badir Fund is a significant step towards empowering SMEs in the Arab region,' said Nathan Kwon, partner and credit head at Shorooq. 'By combining our expertise in structured financing with the Badir Fund's commitment to economic development, we can provide SMEs with the necessary resources to thrive.' Essam Al-Quorashy, secretary general of the Badir Fund. 'This investment from the Arab Fund will unlock vital growth opportunities for small businesses, promote their growth and foster financial inclusion of underserved segments across the Arab region,' Al-Quorashy added. ShipBee secures $235k to digitize logistics in Qatar Doha-based logistics startup ShipBee has closed a $235,000 pre-seed round, valuing the company at $1 million. The funding was led by Qatar's GrowthX, with contributions from two angel investors and $40,000 in founder capital. Founded in March 2024 by Tamer Raafat and Amer Azani, ShipBee provides a tech-enabled logistics platform integrating a digital marketplace, AI-powered software, mobile applications, and international express shipping. The funds will be used to grow the team, enhance the product, and expand regionally. 'This funding empowers us to scale our vision of simplifying logistics through cutting-edge technology,' said Tamer Raafat, co-founder and CEO. 'ShipBee's vision is to build a smart logistics ecosystem in Qatar and MENA using the power of AI and new technologies.' Hamad Al-Hajri, CEO and founder of GrowthX and Snoonu. 'ShipBee perfectly aligns with Qatar's strategic goals by combining innovation with logistics excellence. I firmly believe ShipBee has the potential to become a leading technology-driven logistics platform, both regionally and globally,' Al-Hajri added. Kumulus Water raises $3.5m to scale atmospheric water tech Kumulus Water, a startup headquartered between France and Tunisia, has secured $3.5 million in seed funding to scale its off-grid water production systems. The round included support from Bpifrance, through the France 2030 SGPI initiative and the Ile-de-France Region, as well as regional VCs Khalys Venture, Flat6Labs, PlusVC, and beverage company Spadel. Several family offices and founders from Europe and North Africa also participated. Co-founded by Iheb Triki and Mohamed Abid, Kumulus develops atmospheric water generators that extract drinking water from air humidity — offering infrastructure-free solutions for underserved communities. The new capital will fund the launch of its industrial-grade Kumulus Boks machines and expand operations across France, Spain, and Tunisia, with Saudi Arabia identified as the next market entry point. EightClouds closes $20m round early, eyes consumer sector growth UAE-based alternative investment firm EightClouds has completed its $20 million capital raise ahead of schedule, closing the round in 11 months instead of the planned 24. The firm plans to deploy the funds into strategic acquisitions and initiatives targeting scalable, consumer-focused brands across the Gulf. EightClouds, which focuses on transforming capital into economic prosperity, is concentrating its activities in the food, beverage, and hospitality sectors. These industries, the firm notes, are driven by evolving consumer preferences and digital innovation. The company's expansion strategy will focus on the UAE and Saudi Arabia, markets it views as primed for rapid growth due to policy support and infrastructure readiness. Khwarizmi Ventures eyes $120m for second MENA-focused fund Saudi venture capital firm Khwarizmi Ventures is planning to raise up to $120 million for its second fund, aimed at supporting early-stage startups across the Middle East and North Africa. The fund will target investments from seed to series A stages and is expected to close by the end of 2025. Speaking to Alarabiya Business, managing partner Abdulaziz Al-Turki described the regional climate as a 'golden opportunity' for early-stage investors. 'The number of unicorns in MENA has grown from zero a decade ago to eight today,' he said, adding: 'By 2035, that number could reach 60.' Khwarizmi Ventures' strategy is designed to place capital early in companies with strong scaling potential ahead of larger funding rounds. Edtech startup Taawoni raises $1.6m to expand training platform Saudi-based education technology company Taawoni has closed a $1.6 million investment round led by M Capital and supported by undisclosed investors. The startup, founded in 2021 by Aliyah Al-Ghubayn, operates a platform focused on cooperative training and professional development. Taawoni enables collaboration between universities and employers to deliver co-op training programs that provide students nearing graduation with real-world work experience. The new funds will be used to drive growth and integrate more deeply into both the education and human resources technology ecosystems across the region. Expansion into new regional markets is also planned.
Arab News
2 hours ago
- Arab News
Pakistani PM to meet Saudi Crown Prince today to bolster bilateral ties, discuss regional security
ISLAMABAD: Pakistani Prime Minister Shehbaz Sharif is on a two-day visit to Saudi Arabia this week where he will meet Crown Prince Mohammed bin Salman today, Friday, and discuss trade and investment as well as regional security matters. The Pakistani prime minister will celebrate Eid Al-Adha in the Kingdom and hold a bilateral meeting with the Saudi Crown Prince that is expected to focus on enhancing cooperation in trade, investment and regional security. Sharif reached Jeddah on Thursday evening and departed for Makkah to perform Umrah, the Prime Minister's Office (PMO) said. 'The two leaders will discuss ways to further strengthen bilateral cooperation in various fields, including trade and investment, welfare of the Muslim Ummah, and regional peace and security,' PMO said about Sharif's meeting with the Saudi Crown Prince later today, Friday. Sharif is also expected to express gratitude to the Saudi leadership for their role in de-escalating recent tensions between Pakistan and India. Last month, following the worst military confrontation between India and Pakistan in decades, Saudi Arabia, along with other Gulf nations, played a key role in mediating between the two nuclear-armed neighbors, helping to avert a potential war. The visit also comes amid deepening economic ties between Pakistan and Saudi Arabia. In recent months, the two countries have signed multiple agreements aimed at boosting bilateral trade and investment. Notably, Saudi Arabia has committed to a $5 billion investment package to support Pakistan's economy, which has been grappling with a balance of payments crisis. Last year, Saudi and Pakistani businessmen signed 34 memorandums of understanding worth $2.8 billion, covering sectors such as industry, technology, and agriculture. Additionally, Saudi Arabia's Manara Minerals is in talks to acquire a 10-20 percent stake in Pakistan's $9 billion Reko Diq copper and gold mining project, one of the largest of its kind globally. Defense cooperation is also a key component of the bilateral relationship. The two nations have a history of military collaboration, with Saudi Arabia providing support to Pakistan during times of regional tension and Pakistan training Saudi forces. Pakistan has a 2.7 million-strong diaspora in Saudi Arabia, which accounts for the highest remittance inflow, a crucial lifeline for the country's economy.
Asharq Al-Awsat
3 hours ago
- Asharq Al-Awsat
IMF Sees 'Some Progress' on Lebanon Reforms, But Says External Support Needed
Lebanon has made progress on reforms needed to revive its economy but still has key steps to take and will need external funding on concessional terms, the International Monetary Fund (IMF) said on Thursday after a week of meetings in Beirut. Lebanon's economy went into a tailspin in late 2019, prompted by decades of profligate spending by the country's ruling elite. Reforms required to access IMF funding were repeatedly derailed by political and private interests, according to Reuters. Lebanon's President Joseph Aoun and Prime Minister Nawaf Salam, both of whom took office in early 2025, pledged to prioritize reforms and secure an IMF financing agreement - but the country now faces additional needs with the widespread destruction and displacement caused by Israel's military campaign last year. 'The authorities have made some progress recently, including the amendment of the Bank Secrecy Law and submission of a new bank resolution law to Parliament,' the IMF's Lebanon mission chief Ramirez Rigo said in a written statement. Rigo added that his mission held 'productive discussions' with Lebanese officials, including on restoring the viability of the banking sector, fiscal and debt sustainability and enhancing anti-money laundering and terrorism financing measures. He said Lebanon's medium-term fiscal framework should support the restructuring of Eurobond debts, which Lebanon defaulted on in 2020, leading to a sovereign default on its $31 billion of outstanding international bonds. 'Given Lebanon's substantial reconstruction needs, limited fiscal space and lack of capacity to borrow, the country will require significant support from external partners on highly concessional terms,' the IMF statement said. The World Bank estimated Lebanon's recovery and reconstruction needs following Israel's military campaign at $11 billion. But the US has said it opposes any reconstruction funds to Lebanon until Hezbollah - the Iran-backed Lebanese armed group that fought Israel last year - is disarmed.
