Saudi Arabia leads March PMI rankings among GCC nations

Saudi Arabia leads March PMI rankings among GCC nations
The economic index reached 57 in March, showing a slight decrease from 57.2 in February, according to a report by the Riyad Bank Saudi Arabia PMI by S&P Global. Shutterstock
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Updated 03 April 2024
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Saudi Arabia leads March PMI rankings among GCC nations

Saudi Arabia leads March PMI rankings among GCC nations

RIYADH: Saudi Arabia’s non-oil private sector saw steady growth in March, with output accelerating to a six-month high, as reflected by the Kingdom’s Purchasing Managers’ Index.  

The economic index reached 57 in March, showing a slight decrease from 57.2 in February, according to a report by the Riyad Bank Saudi Arabia PMI by S&P Global.  

Any PMI reading above 50 indicates growth in the non-oil sector, while readings below that signal contraction.  

Saudi Arabia’s PMI in March surpassed that of other Gulf Cooperation Council countries such as the UAE, Egypt, and Kuwait, indicating that the Kingdom’s non-oil sector growth is in line with the goals outlined in Vision 2030. 

Strengthening the non-oil sector is crucial for Saudi Arabia as the Kingdom steadily diversifies its economy away from oil. 

The US-based firm reported that operating conditions in Saudi Arabia’s non-oil private sector exhibited robust improvement at the end of the first quarter, with companies emphasizing significant increases in order books and new customers.  

Naif Al-Ghaith, chief economist at Riyad Bank, said: “The PMI for Saudi Arabia showcased a notable upswing as the non-oil economy exhibited significant expansion in the most recent period. This expansion was primarily fueled by a surge in demand across various sectors, indicating a robust economic performance.”   

He added: “Business activity experienced a substantial uptick, marking the most significant growth in six months. The positive momentum also prompted accelerated purchasing activities and additional hiring, underscoring a buoyant market outlook.”   

According to the report, the rise in output levels among non-oil private sector firms was driven by robust new orders and strong demand conditions. 

Similarly, new orders placed at non-oil firms rose sharply in March, with the expansion rate accelerating for the second month in a row. 

The survey also revealed that demand from foreign customers increased in March. 

The report indicated rising optimism among businesses in the non-oil sector for the coming 12 months, driven by anticipations of growth in demand. 

“The surge in orders and customer acquisition not only bolstered current operations but also laid the foundation for continued expansion and potential business growth in the foreseeable future,” noted Al-Ghaith.  

He added: “Moreover, the concurrent easing of cost pressures, particularly in terms of wages, provided companies with greater flexibility and resources to invest in their operations and workforce, fostering a conducive environment for sustained economic progress and development in Saudi Arabia.”  

The report further noted that private sector firms in the Kingdom witnessed a decrease in cost inflation for the second consecutive month. 

UAE maintains growth 

Business conditions in the UAE non-oil private sector strengthened sharply in March, with optimism reaching its highest point in six months, as indicated by a survey.  

According to the latest S&P Global Purchasing Managers’ Index, the UAE’s PMI reached 56.9 in March, slightly lower than February’s 57.1 but well above the 50 mark denoting expansion in activity.  

David Owen, a senior economist at S&P Global Market Intelligence, said: “The overall picture for the UAE non-oil private sector remained rosy at the end of the first quarter. The latest PMI reading of 56.9 in March signaled a robust upturn in business conditions, with order book inflows and activity levels still growing sharply.”     

The US-based firm revealed that businesses in the Emirates faced significant pressure on their workloads, with reports of administrative delays and increased supply constraints due to the Red Sea shipping crisis.   

As a result, the data signaled the joint-fastest accumulation of backlogs of work in the survey’s 15-year history.  

“While the surge in backlogs is concerning as an indicator of business health, the pent-up demand should support activity growth for even longer once these issues are resolved,” added Owen.   

According to the report, strong demand remained a key feature of growth in the non-oil economy, as surveyed firms witnessed another sharp uplift in new order volumes. 

Moreover, the rate of expansion picked up from February’s six-month low, though it remained slightly softer than those recorded around the turn of the year. 

Additionally, optimism toward future business activity among non-oil firms in the UAE rose to the second-strongest level in four years. 

“While the surge in backlogs is concerning as an indicator of business health, the pent-up demand should support activity growth for even longer once these issues are resolved,” the economist added.  

Meanwhile, the Central Bank of the UAE revised down its economic growth projection, citing the decision of the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+. 

CBUAE now expects the country’s economy to expand by 4.2 percent in 2024, down from an earlier estimate of 5.7 percent. 

Kuwait records spike in new orders  

Kuwait, on the other hand, saw its fastest rise in new orders since 2020 in March, driving the PMI to 53.2, up from 52.7 in February.  

According to the report, rates of expansion in output and new orders quickened, while business confidence improved, although job growth remained only fractional. 

Andrew Harker, economic director at S&P Global Market Intelligence, stated that non-oil firms in Kuwait are currently experiencing a strong growth phase, with competitive pricing proving successful in attracting increasing numbers of customers. 

Due to the marginal rise in job growth, backlogs of work continued to build, with outstanding business accumulating for 14 consecutive months. 

“If new orders continue to flow in as they have been doing, firms will likely need to take on additional staff to prevent delays in the completion of projects,” said Harker.  

Qatar economy

Qatar witnessed a marginal decline in its PMI to 50.6 in March from 51 in February, indicating a sustained improvement in business conditions in the non-energy private sector economy. 

“The PMI remained firmly in stable territory in March, reflecting further growth in output, new orders and employment in the Qatari non-energy economy,” said Yousuf Mohamed Al-Jaida, CEO of Qatar Financial Center Authority. 

He added that in the first quarter of 2024, the headline index has trended in line with the average for the fourth quarter of 2023, indicating sustained economic growth. 

According to a press statement, in March, demand for goods and services in Qatar’s non-energy economy continued to expand, with local firms also extending their workforces, marking over a year of consecutive growth. 

Egypt sees fall in business activity  

Meanwhile, Egypt’s non-oil private sector continued to deteriorate in March, according to another report by S&P Global. The PMI reached 47.6, slightly higher than February’s 47.1, but remained below the expansion mark of 50. 

According to the report, non-oil private sector activities declined sharply in March as weak order books and elevated inflationary pressures continued to impact business output and confidence. 

“Businesses in Egypt’s non-oil private sector continued to come under pressure from the country’s recent currency crisis in March,” said Owen.  

He added that February’s PMI results had indicated a considerable downturn in business activity, and “March was little different, except for a modest reduction in the rate of decline.” 

Even though firms expressed positivity about the next 12 months, there were some concerns that economic headwinds might further reduce sales. 

“PMI survey data on prices suggests this may be the case, with rates of input cost and output price inflation slowing to three-month lows,” said Owen. 

On the other hand, he added that firms are still lacking confidence that activity will grow over the year ahead, suggesting that economic risks may take more time to disappear. 


Oil Updates – prices stabilize, Middle East tensions remain in focus

Oil Updates – prices stabilize, Middle East tensions remain in focus
Updated 2 min 58 sec ago
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Oil Updates – prices stabilize, Middle East tensions remain in focus

Oil Updates – prices stabilize, Middle East tensions remain in focus

NEW DELHI: Oil prices edged higher on Tuesday, after falling in the previous session, as investors continued to assess the risk from geopolitical concerns in the Middle East, according to Reuters.

Global benchmark Brent crude oil futures traded 18 cents higher at $87.18 a barrel by 9:34 a.m. Saudi time, and US West Texas Intermediate crude futures also gained 16 cents to $82.06 a barrel.

Both benchmarks fell 29 cents in the previous session on signs that a recent escalation of tensions between Israel and Iran had little near-term impact on oil supplies from the region.

“The unwinding of geo-political risk premium has dented crude oil prices recently as supply was not disrupted meaningfully,” said Sugandha Sachdeva, founder of Delhi-based research firm SS WealthStreet.

But the evolving geopolitical landscape remains critical in steering crude oil prices, she said.

“While there are no indications of an imminent full-scale war between the countries involved, any escalation in tensions could quickly reverse the current trend,” Sachdeva added.

ANZ analysts echoed the sentiment and highlighted US approval of new sanctions on Iran’s oil sector that broaden current sanctions to include foreign ports, vessels and refineries that knowingly process or ship Iranian crude.

Also, EU foreign ministers agreed in principle on Monday to expand sanctions on Iran after Tehran’s missile and drone attack on Israel, the bloc’s foreign policy chief Josep Borrell said.

“The geopolitical backdrop is still very fraught with so many risks at the moment, so clearly we’re going to see a lot of volatility until there’s a lot more clarity around it,” the ANZ analysts said in a podcast.

Israeli troops fought their way back into an eastern section of Khan Younis in a surprise raid, residents said on Monday, sending people who had returned to abandoned homes in the ruins of the southern Gaza Strip’s main city fleeing once more.

Investors are waiting for the release of the US gross domestic product figures and the March personal consumption expenditure data — the Fed’s preferred inflation gauge — later this week to assess the trajectory of monetary policy.

US crude oil inventories are expected to have increased last week while refined product stockpiles likely fell, according to a preliminary Reuters poll of analysts.

“Sticky US inflation figures, hawkish statements from key Fed officials, and rising US inventories are all acting as constraints on crude oil price growth,” Sachdeva said. 


Pakistan hopes to get new IMF loan by early July, says finance minister

Pakistan hopes to get new IMF loan by early July, says finance minister
Updated 23 April 2024
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Pakistan hopes to get new IMF loan by early July, says finance minister

Pakistan hopes to get new IMF loan by early July, says finance minister
  • Pakistan’s current $3 billion financial arrangement with IMF expires in late April
  • Islamabad is seeking “bigger,” long-term loan to ensure macroeconomic stability

Pakistan is hoping to reach a staff-level agreement with the International Monetary Fund by June or early July, its finance minister said on Tuesday.

The country’s current $3 billion arrangement with the fund runs out in late-April, which it secured last summer to avert a sovereign default.

Islamabad is seeking a long-term bigger loan to help bring permanence to macroeconomic stability as well as an umbrella under which the country can execute structural reforms.

“We are still hoping that we get a staff-level agreement by June or early July,” Finance Minister Muhammad Aurangzeb told a conference in Islamabad.

He returned from Washington last week after leading a team to attend the IMF and World Bank’s spring meetings. “We had very good discussions in Washington,” he said.

He said he did not know at this stage the volume and tenure of the longer program.


Riyadh prepares to host special meeting of World Economic Forum

Riyadh prepares to host special meeting of World Economic Forum
Updated 22 April 2024
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Riyadh prepares to host special meeting of World Economic Forum

Riyadh prepares to host special meeting of World Economic Forum
  • The aim of the gathering is to find solutions to global challenges relating to humanitarian issues, the climate and the economy

RIYADH: Final preparations are taking place this week in the Saudi capital, Riyadh, for a special meeting of the World Economic Forum in the city on April 28 and 29.

Heads of state and senior executives from the public and private sectors are expected to be among the participants, who will discuss a range of global economic issues and developments under the theme “Global Collaboration, Growth and Energy for Development.”

The aim of the meeting is to find solutions to a host of global challenges relating to humanitarian issues, the climate and the economy. On the sidelines of the main event, the Kingdom will host exhibitions and other events to highlight the latest developments and trends in areas such as sustainability, innovation and culture.

The selection of Riyadh as host of the special meeting reflects the extensive partnership between Saudi Arabia and the WEF, officials said.

It builds upon the Kingdom’s active participation and contributions to the WEF’s Annual Meetings in Davos.

The agenda is designed to rekindle the spirit of cooperation and collaboration with various panel discussions, workshops, and networking opportunities. It represents a significant gathering of global leaders and experts dedicated to forging a path toward a more resilient, sustainable, and equitable world.


ACWA Power inks deal to drive renewable energy development in Azerbaijan 

ACWA Power inks deal to drive renewable energy development in Azerbaijan 
Updated 22 April 2024
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ACWA Power inks deal to drive renewable energy development in Azerbaijan 

ACWA Power inks deal to drive renewable energy development in Azerbaijan 

RIYADH: Saudi energy giant ACWA Power is signing a new agreement to accelerate the development of renewable projects in Azerbaijan. 

The private water desalination company, known for its extensive green hydrogen storage capacity, announced it has now finalized an agreement with SOCAR, the State Oil Company of the Azerbaijan Republic.

This development follows an initial cooperation understanding signed in February 2023.

This deal focuses on the joint evaluation of the “Low-Carbon/Green Fertilizer” project, in which the two bodies will collaborate on assessing the production of green hydrogen to support the decarbonization of SOCAR downstream assets.

Marco Arcelli, CEO of ACWA Power, said in a statement, “I am proud to announce our collaboration with SOCAR to ignite a new era of renewable energy development in Azerbaijan. With our shared vision and commitment to sustainability, this partnership will not only drive innovation but also pave the way for a cleaner and brighter future for this country.”

The primary directive of the agreement will be to enhance SOCAR’s carbamide fertilizer facility, striving toward more value-added low-carbon products.

As part of the project, SOCAR and ACWA Power will conduct feasibility studies to assess the potential production and sale of green fertilizers, aligning with Azerbaijan’s vision of achieving a clean environment.

ACWA Power will take a role in driving the project’s renewable energy and green hydrogen production aspects, bringing their expertise to bear on this initiative.

For his part, Anar Mammadov, vice president of SOCAR, said, “Azerbaijan is committed to building a sustainable future, and our partnership with ACWA Power underscores our shared dedication to driving renewable energy development in the region. Together, we will work towards realizing our vision of a cleaner, greener Azerbaijan.”

He added: “The cooperation with ACWA Power represents a significant step forward in Azerbaijan’s transition towards a low-carbon economy and underscores the commitment of both organizations to sustainable development practices.” 

Preceding this announcement, the two nations posed their intent to collaborate on renewables as Saudi Arabia’s Minister of Energy Prince Abdulaziz bin Salman met with Azerbaijan’s Minister of Environment and Natural Resources Mukhtar Babayev in March.

During the meeting, the counterparts discussed opportunities for work and cooperation between their two countries in the field of climate change. 

They also talked about joint efforts to achieve the goals of the UN Framework Convention on Climate Change and the Paris Agreement, the Kingdom’s ministry said in a statement at the time.


Closing Bell: TASI edges down to close at 12,509 points 

Closing Bell: TASI edges down to close at 12,509 points 
Updated 22 April 2024
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Closing Bell: TASI edges down to close at 12,509 points 

Closing Bell: TASI edges down to close at 12,509 points 

RIYADH: Saudi Arabia’s Tadawul All Share Index closed at 12,508.93 points on Monday, losing 9.29 points or 0.07 percent. 

The parallel market, Nomu, also shed 343.96 points or 1.28 percent to end the day’s trading at 26,596.22. 

Concurrently, the MSCI Tadawul 30 Index fell 3.95 points or 0.25 percent to finish at 1,567.16. 

The main index posted a trading value of SR8.8 billion ($2.3 billion), with 74 stocks advancing and 148 declining. On the other hand, Nomu reported a trade volume of SR37.7 million. 

Al-Rajhi Company for Cooperative Insurance was the top performer on TASI as its share price surged 9.93 percent to SR126.20. LIVA Insurance Co. followed next with its share price jumping 9.92 percent to close at SR21.50. 

Gulf General Cooperative Insurance Co.  also performed well, climbing 9.16 percent to SR16.44. Raydan Food Co. and Fitaihi Holding Group increased 8.14 and 8.11 percent to SR28.55 and SR4.40, respectively. 

Conversely, Saudi Cable Co. recorded the most significant dip, declining 4.94 percent to SR75. 

Alkhaleej Training and Education Co. and Ash-Sharqiyah Development Co. also experienced setbacks, with their shares dropping to SR31.50 and SR23.40, reflecting declines of 4.83 and 4.10 percent, respectively.

Nomu’s top performer was Dar Almarkabah for Renting Cars Co., which saw a 9.73 percent jump to SR44. Mayar Holding Co. and Alqemam for Computer Systems Co. also recorded notable gains, with their shares closing at SR4.27 and SR89.80, marking an increase of 7.02 and 5.03 percent, respectively. Arabian International Healthcare Holding Co. and Foods Gate Trading Co. also fared well. 

On Nomu, Raoom Trading Co. was the worst performer, declining by 7.28 percent to SR135. Other underperformers included Natural Gas Distribution Co. and National Environmental Recycling Co., whose share prices dropped 5.58 percent and 5.23 percent to SR42.30 and SR12.32, respectively. 

Watani Iron Steel Co. and Future Care Trading Co. declined during the day to settle at SR2.81 and SR8.70, respectively.