Saudi non-oil sector business surges to ‘highest levels in a year’

The Saudi Arabian non-oil economy is well on the path to recovery, according to David Owen, an economist at IHS Markit. (Shutterstock/File Photo)
The Saudi Arabian non-oil economy is well on the path to recovery, according to David Owen, an economist at IHS Markit. (Shutterstock/File Photo)
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Updated 05 January 2021

Saudi non-oil sector business surges to ‘highest levels in a year’

The Saudi Arabian non-oil economy is well on the path to recovery, according to David Owen, an economist at IHS Markit. (Shutterstock/File Photo)
  • Price discounting and a healthy domestic market saw sentiment rise in December

JEDDAH: A recent surge in new orders has meant business conditions in the Kingdom’s non-oil sectors have risen to the highest levels in more than a year.

According to the latest monthly IHS Markit Saudi Arabia Purchasing Managers’ Index (PMI), the rating for December was 57, up from 54.7 in November, and the highest level since November 2019. Any figure greater than 50 indicates overall improvement in the sector.

“The Saudi Arabian non-oil economy is well on the path to recovery,” said David Owen, an economist at IHS Markit.

“According to respondents, business activity has been helped by falling COVID-19 case numbers in the fourth quarter of 2020, despite other major economies suffering a second wave. The rollout of a vaccine meanwhile led to increased optimism that demand will strengthen over the coming year,” Owen added.

The growth in December was attributed to an uptick in new business, which came after improved market demand and price discounting by companies.

The new orders were driven mainly from the domestic market, with just a modest increase in exports from overseas. In addition to new orders for work, survey respondents also reported that ongoing projects were also performing better, leading to a higher overall workload during the last month of 2020.

“On the negative side, the latest expansion did not support a rise in job numbers during December. In fact, employment fell slightly as firms diverted spending towards inputs and noted that current capacity still allowed them to clear both new and outstanding work,” Owen said.

While orders were up, the price inflation seen over the last five months leading up to December began to subside, as companies increasingly offered discounts in order to entice new customers and shift stock towards the end of the year.

Looking to 2021, expectations for the year are high, with optimism boosted by the global approval of COVID-19 vaccines and hope that business conditions will return to normal in the Kingdom.

“The degree of sentiment rose to its highest level seen throughout 2020,” the report said.


OPEC raises 2021 oil demand growth forecast on hope pandemic wanes

OPEC raises 2021 oil demand growth forecast on hope pandemic wanes
Updated 13 April 2021

OPEC raises 2021 oil demand growth forecast on hope pandemic wanes

OPEC raises 2021 oil demand growth forecast on hope pandemic wanes
  • Upward revision by the oil producers’ alliance marks a change of tone from previous months

LONDON: OPEC on Tuesday raised its forecast for growth in world oil demand this year on expectations the pandemic will subside, providing help for the group and its allies in their efforts to support the market.

Demand will rise by 5.95 million barrels per day (bpd) in 2021, or 6.6 percent, the Organization of the Petroleum Exporting Countries forecast in its monthly report. That is up 70,000 bpd from last month.

“As the spread and intensity of the COVID-19 pandemic are expected to subside with the ongoing rollout of vaccination programs, social distancing requirements and travel limitations are likely to be scaled back, offering increased mobility,” OPEC said in the report.

The upward revision marks a change of tone from previous months, in which OPEC has lowered demand forecasts because of continued lockdowns. A further recovery could bolster the case for OPEC and its allies, known as OPEC+, to unwind more of last year’s record oil output cuts.

Oil gained further toward $64 a barrel after the report was released on Tuesday. Prices have risen to pre-pandemic highs above $70 this year, boosted by anticipation of economic recovery and OPEC+ supply restraint.

OPEC made a small upward revision in its 2021 demand projection last month, but it has steadily lowered the forecast from 7 million bpd expected in July 2020.

The group raised its forecast of 2021 world economic growth to 5.4 percent from 5.1 percent, assuming the impact of the pandemic is “largely contained” by the beginning of the second half of the year.

“The global economic recovery continues, significantly supported by unprecedented monetary and fiscal stimulus,” OPEC said. “The recovery is very much leaning toward the second half of 2021.”

OPEC+ agreed on April 1 to ease oil output cuts gradually from May. The report also showed higher OPEC oil output already as Iran, exempt from making voluntary cuts because of US sanctions, pumped more in March, driving a 200,000 bpd rise in the group’s output to 25.04 million bpd.

OPEC+ cut supply by a record 9.7 million bpd last year to support the market as demand collapsed. Most of those curbs remain in place even after the April 1 decision. OPEC+ holds its next policy meeting on April 28. Rival producers are also boosting supply, although OPEC left its forecast of non-OPEC output growth in 2021 steady at almost 1 million bpd and still sees US shale output, which often recovers in response to higher prices, declining.

With higher demand and steady non-OPEC supply, OPEC raised its estimate of global demand for its crude to 27.4 million bpd this year, up 200,000 bpd from last month and allowing for higher average OPEC production in 2021.


Bitcoin hits record high before Nasdaq listing

Bitcoin hits record high before Nasdaq listing
Updated 13 April 2021

Bitcoin hits record high before Nasdaq listing

Bitcoin hits record high before Nasdaq listing
  • Bitcoin, which has growing mainstream acceptance as an investment and a means of payment, rose as much as 5 percent on Tuesday

LONDON: Bitcoin hit a record of $62,741 on Tuesday, extending its 2021 rally to new heights a day before Coinbase’s share listing in the US.

The largest US cryptocurrency exchange’s listing on the Nasdaq on Wednesday is considered a landmark victory for cryptocurrency advocates.

The world’s biggest cryptocurrency, which has growing mainstream acceptance as an investment and a means of payment, rose as much as 5 percent on Tuesday. Smaller rival Ethereum also reached a record high of $2,205. Major firms including BNY Mellon, Mastercard Inc. and Tesla Inc. are among those to have embraced or invested in cryptocurrencies.

Bitcoin topped $60,000 early last month, fueled by Tesla’s move to buy $1.5 billion of the digital currency for its balance sheet. For the past two weeks, it had traded in a tight range. “When bitcoin markets create new highs the price often range-trades and we witness a round of profit-taking,” said James Butterfill of digital asset manager CoinShares.

“During this most recent period have witnessed a similar profit-taking round, which now looks to have run its course.”

The multi-fold rise in cryptocurrencies is also driven by investors seeking high-yielding assets amid low interest rates.


Saudi fintech startup secures $670k seed funding

Saudi fintech startup secures $670k seed funding
Updated 13 April 2021

Saudi fintech startup secures $670k seed funding

Saudi fintech startup secures $670k seed funding
  • New legislation in Saudi Arabia will make e-invoicing necessary in all transactions

JEDDAH: Saudi fintech startup Prexle has raised SR2.5 million ($670,000) in seed funding from angel investors, the company announced this week.

A cloud-based point-of-sale software startup, Prexle’s platform helps retail store owners control inventories, customer demands, purchasing orders, discounts and generate business performance reports.

In a press statement, CEO and co-founder Abdullah Al-Ajlan said: “We’re happy to close our round of investment, which is going to surely help us improve the retail industry in the Kingdom through employing the latest technologies in the point-of-sale industry.”

Yazeed Al-Saif, co-founder and chief technology officer, added: “We value our investors’ trust. This round marks an important milestone in our journey to change the way retail works, and will allow us to even further develop and improve our product.”

By the end of 2021, new legislation in Saudi Arabia will make e-invoicing necessary in all transactions, and Prexle is one of the companies that stands to benefit from this requirement.

The number of digital payment transactions in the Kingdom surged 75 percent in 2020 as Saudi consumers embraced online shopping during the coronavirus pandemic.

The total number of digital transactions last year amounted to about 2.8 billion, an increase of 75 percent compared with the same period in the previous year. The value of these transactions totaled about SR349 billion, an increase of almost 24.1 percent compared with the same period in 2019.

Network International, the UAE-based digital payment processor which this month told Arab News it is pushing ahead with a Saudi expansion later this year, reported that the amount of non-cash payments it processed in the Kingdom grew from 8 percent in 2017 to 16 percent in 2019, making Saudi Arabia one of its fastest growing markets.


Emirati Coffee set to expand into Saudi Arabia

Emirati Coffee set to expand into Saudi Arabia
Updated 13 April 2021

Emirati Coffee set to expand into Saudi Arabia

Emirati Coffee set to expand into Saudi Arabia
  • Emirati Coffee reported a 3,135 percent increase in online sales in 2020, fueled by strong market demand for its specialty coffee produce

JEDDAH: Emirati Coffee, the UAE’s first specialty coffee roastery, is expanding into the Kingdom with the opening of its first Saudi branch in July 2021. The chain, which currently has 160 locations worldwide, will open in Alkhobar under the brand name Knowhere.

The company is preparing to open an outlet in Riyadh in 2022.

Mohamed Ali Al-Madfai, CEO of Emirati Coffee, told Arab News that the Riyadh outlet would be called the Emirati Coffee Roastery.

Al-Madfai said he believed there was great potential for growth in the Saudi market and that he is aiming to capitalize on the brand’s popularity among Saudi travelers, “especially those that came to love that brand when visiting Dubai pre-pandemic,” he said. Emirati Coffee reported a 3,135 percent increase in online sales in 2020, fueled by strong market demand for its specialty coffee produce.

The busiest period was during the first two months of the pandemic, when the UAE launched a national sterilization campaign to contain the virus. “Coffee was already the number one e-commerce grocery product before 2020, but the pandemic boosted the growth due to greater consumption at home.

Coffee buyers cut back on trips to the supermarket and coffee drinkers can’t go to the cafés,” Al-Madfai said.

He added: “Consumers resorted to online purchases and with the availability of our own delivery fleet, they were able to get their hands on their cup of coffee.”


Business leaders urge Biden to set ambitious climate goal

Business leaders urge Biden to set ambitious climate goal
Updated 13 April 2021

Business leaders urge Biden to set ambitious climate goal

Business leaders urge Biden to set ambitious climate goal
  • Biden has promised to reveal the nonbinding but symbolically important 2030 goal before the Earth Day summit opens April 22

WASHINGTON: More than 300 businesses and investors, including such giants as Apple, Google, Microsoft and Coca-Cola, are calling on the Biden administration to set an ambitious climate change goal that would cut US greenhouse gas emissions by at least 50 percent below 2005 levels by 2030.

The target would nearly double the nation’s previous commitment and require dramatic changes in the power, transportation and other sectors. President Joe Biden is considering options for expected carbon reductions by 2030 ahead of a virtual climate summit the US is hosting later this month.

The so-called Nationally Determined Contribution is a key milestone as Biden moves toward his ultimate goal of net-zero carbon emissions by 2050. Biden has promised to reveal the nonbinding but symbolically important 2030 goal before the Earth Day summit opens April 22.

“A bold 2030 target is needed to catalyze a zero-emissions future, spur a robust economic recovery, create millions of well-paying jobs and allow the US to ‘build back better’ from the pandemic,” the businesses and investors said in a letter to Biden. “New investment in clean energy, energy efficiency and clean transportation can build a strong, more equitable and more inclusive American economy,” they wrote.

An ambitious 2030 target would guide the federal government’s approach to sustainable and resilient infrastructure, as well as zero-emissions vehicles and buildings, and “would inspire other industrialized nations to set bold targets of their own,” the group wrote.

Besides the tech and consumer products giants, companies with major energy holdings, including Exelon, General Electric, PG&E and Edison International, also signed the letter.

The letter comes as fissures between corporate America and the Republican Party have opened over the GOP’s embrace of conspiracy theories and rejection of mainstream climate science, as well as its dismissal of the 2020 election outcome. The most recent flashpoint was in Georgia, where a new Republican-backed law restricting voting rights drew harsh criticism from Delta Air Lines and Coca-Cola, whose headquarters are in the state, and resulted in Major League Baseball pulling the 2021 All-Star Game from Atlanta.

More than 100 business leaders participated in a Zoom call last weekend to discuss how to oppose Republican-backed proposals across the country that could limit voting. Options include stopping political donations and holding off in investments in states that approve the laws.

On climate, the business leaders told Biden they “applaud your administration’s demonstrated commitment to address climate change head-on, and we stand in support of your efforts.”

Millions of Americans are already feeling the impacts of climate change, they wrote, citing the severe winter storm that caused blackouts in Texas and other states, deadly wildfires in California and record-breaking hurricanes in the Southeast and Gulf Coast.

“The human and economic losses of the past 12 months alone are profound,” they wrote. “Tragically, these devastating climate impacts also disproportionately hit marginalized and low-income communities who are least able to withstand them. We must act now to slow and turn the tide.”

While Biden has reentered the US into the Paris climate accord and made climate action a pillar of his presidency, more action is needed, the business leaders said. “An effective national climate strategy will require all of us,” they told Biden, but “you alone can set the course by swiftly establishing a bold US 2030 target.”