Saudi Industrial Production Index rises 1.6% in July on manufacturing growth
Saudi Industrial Production Index rises 1.6% in July on manufacturing growth /node/2570765/business-economy
Saudi Industrial Production Index rises 1.6% in July on manufacturing growth
According to data from the General Authority for Statistics, manufacturing activities grew 4.6%, lifting the Kingdom’s IPI to 106.2 points for the month. Shutterstock
Saudi Industrial Production Index rises 1.6% in July on manufacturing growth
Updated 10 September 2024
Nirmal Narayanan
RIYADH: Saudi Arabia’s Industrial Production Index rose 1.6 percent in July, compared to the same month last year, driven by a surge in manufacturing activity, official data showed.
According to data from the General Authority for Statistics, manufacturing activities grew 4.6%, lifting the Kingdom’s IPI to 106.2 points for the month.
GASTAT revealed that this rise in the manufacturing sector was propelled by an increase in the manufacturing of chemical products, and food items, which surged by 5.7 percent and 10.1 percent, respectively.
Saudi Arabia’s strong manufacturing growth is pivotal to achieving the goals outlined in Vision 2030, as the Kingdom works to diversify its economy and reduce reliance on oil.
GASTAT, however, noted that mining and quarrying activity fell by 0.8 percent year on year in July, attributed to Saudi Arabia’s decision to cut oil production to 8.9 million barrels per day in line with OPEC+ agreements.
“The index for oil activities in July decreased by 1.1 percent compared to the same month of the previous year, due to the decline in oil production. While the index for non-oil activities increased by 8.2 percent, supported by an increase in all non-oil economic activities,” stated GASTAT.
To stabilize the market, Saudi Arabia reduced oil production by 500,000 barrels per day in April 2023, a cut that has been extended until December 2024.
Electricity, gas, steam, and air conditioning supply activities posted an 8.2 percent year-on-year increase in July, while water supply, sewerage, waste management, and remediation activities rose by 1.1 percent.
On a month-on-month basis, manufacturing activity increased by 1.7 percent, driven by a 3.3 percent rise in the production of coke and refined petroleum products.
Additionally, mining and quarrying activities increased by 1.3 percent in July compared to June.
“Based on the month-on-month trend, the index of oil activities and non-oil activities increased by 1.6 percent and 1.8 percent, respectively,” added GASTAT.
The IPI is an economic indicator that measures changes in industrial output based on production surveys.
Oil tumbles further as US-China trade tensions fuel recession fears
Updated 18 sec ago
Reuters
LONDON : Oil prices extended last week’s losses on Monday, with West Texas Intermediate falling more than 4 percent, as escalating trade tensions between the US and China stoked fears of a recession that would reduce demand for crude.
Brent futures declined $2.54, or 3.9 percent, to $63.04 a barrel at 10:45 a.m. Saudi time, while US WTI crude futures lost $2.5, or 4.03 percent, to $59.49. Both benchmarks dropped their lowest since April 2021.
Oil plunged 7 percent on Friday as China ramped up tariffs on US goods, escalating a trade war that has led investors to price in a higher probability of recession. Last week, Brent lost 10.9 percent, while WTI dropped 10.6 percent.
“It’s hard to see a floor for crude unless the panic in the markets subsides and it’s hard to see that happening unless Trump says something to arrest snowballing fears over a global trade war and recession,” said Vandana Hari, founder of oil market analysis provider Vanda Insights.
Responding to US President Donald Trump’s tariffs, China said on Friday it would impose additional levies of 34 percent on American goods, confirming investor fears that a full-blown global trade war is underway.
Imports of oil, gas and refined products were given exemptions from Trump’s sweeping new tariffs, but the policies could stoke inflation, slow economic growth and intensify trade disputes, weighing on oil prices.
Federal Reserve Chair Jerome Powell said on Friday that Trump’s new tariffs are “larger than expected,” and the economic fallout, including higher inflation and slower growth, likely will be as well.
Adding to the price changes, the Organization of the Petroleum Exporting Countries and allies decided to advance plans for output increases. The group now aims to return 411,000 barrels per day to the market in May, up from the previously planned 135,000 bpd.
“This potential influx of supply, reversing cuts maintained over the past two years, represents a major shift in market dynamics and acts as a significant headwind for prices,” said Sugandha Sachdeva, founder of SS WealthStreet, a New Delhi-based research firm.
Over the weekend, top OPEC+ ministers stressed the need for full compliance with oil output targets and called for overproducers to submit plans by April 15 to compensate for pumping too much.
On the geopolitical front, Iran on Sunday rejected US demands that it hold direct nuclear talks or face strikes. Russia claimed to have captured Basivka in Ukraine’s Sumy region and said its forces were attacking multiple nearby settlements.
Riyadh Air receives Air Operator Certificate, set to launch flights in 2025
Updated 06 April 2025
Reem Walid
RIYADH: Saudi Arabia’s Riyadh Air has received approval from the General Authority of Civil Aviation to commence its flight operations, according to a statement released on Sunday.
The airline, owned by the Public Investment Fund, was granted the Air Operator Certificate after successfully meeting all regulatory, safety, and operational standards.
This milestone aligns with Riyadh Air’s goal of connecting over 100 international cities by 2030 and contributing more than $20 billion to the Kingdom’s economy.
Additionally, the airline aims to enhance the travel experience by leveraging digital technology to streamline bookings and airport procedures, catering to Saudi Arabia’s young, tech-savvy population, as highlighted by CEO Tony Douglas.
During the certificate delivery ceremony, Saudi Minister of Transport and Logistics Saleh Al-Jasser told Al-Ekhbariya: “We congratulate Riyadh Air, the Public Investment Fund, and the Saudi citizens on the successful completion of the licensing process and the official issuance of the Air Operator Certificate.”
He further emphasized that Riyadh Air is now fully certified to operate, marking a significant milestone in the initiative set in motion by Crown Prince Mohammed bin Salman’s strategy, which tasked PIF with launching the carrier.
“Establishing an airline of this scale is a monumental task, but the process is progressing smoothly. We are now in the final stages, with the next step being the launch of the first flight before the end of this year,” the minister remarked.
Al-Jasser also highlighted that the Kingdom is in the midst of restructuring its aviation infrastructure and launching several initiatives aimed at advancing the country’s aviation sector.
“The transport strategy includes restructuring the aviation sector, transitioning from a single operator model to a multi-operator system,” he said.
The minister added: “King Salman International Airport Development Co. is making steady progress in finalizing the airport’s design, with construction already underway. This comprehensive project includes passenger terminals, runways, private aviation facilities, and technical services, creating a fully integrated aviation city that is being developed as planned.”
Al-Jasser further noted that development projects are ongoing at airports in Jazan, Hail, and Qassim, as well as in Al-Baha, Abha, Taif, and Al-Jouf.
“Saudi airports have made significant strides in regulations, legislation, and services, which have attracted investments, strengthened passenger rights, and enhanced service quality,” he said.
The minister also emphasized: “We’ve expanded from 100 destinations connected to the Kingdom’s airports to 172 destinations, with the aviation strategy being a comprehensive plan for the future.”
Saudi Aramco cuts oil prices to Asia to four-month low
Updated 06 April 2025
Arab News
RIYADH: Saudi Aramco on Sunday cut its crude oil prices for Asian buyers in May to their lowest in four months, an official document showed.
This is the second consecutive month Aramco has lowered its prices. The company also lowered April prices for other grades it sells to Asia by $2.30 per barrel.
Aramco cut the May official selling price for flagship Arab Light crude by $2.30 to $1.20 a barrel above the average of Oman and Dubai prices, a pricing document from the producer showed.
The company also lowered April prices for other grades it sells to Asia by $2.30 per barrel.
Eight OPEC+ countries unexpectedly agreed on Thursday to advance their plan to phase out oil output cuts by increasing output by 411,000 barrels per day in May, a decision that prompted oil prices to extend earlier sharp losses.
Prior to the news, Arab Light price for Asia had been expected to fall by $1.80 to $2 in a Reuters survey, tracking the steep declines in benchmark prices in March.
Saudi Aramco’s crude oil is classified into five grades based on density: Super Light (greater than 40), Arab Extra Light (36-40), Arab Light (32-36), Arab Medium (29-32), and Arab Heavy (below 29). These price changes influence the cost of approximately 9 million barrels per day of crude oil shipped to Asia, setting price benchmarks for other major oil producers such as Iran, Kuwait, and Iraq.
For North America, Aramco has set the May OSP for Arab Light crude at $3.60 per barrel above the Argus Sour Crude Index.
Spot premium of Dubai averaged at $1.38 per barrel in March, down from $3.33 per barrel, the average in February following more Russian supply returning to Asia since March.
Markets in freefall: Gulf bourses hit hard by US tariffs
Updated 06 April 2025
Miguel Hadchity
RIYADH: Gulf bourses experienced a downturn on Sunday as fresh US tariffs dampened investor confidence across the region, leading to widespread sell-offs in line with last week’s global market slump.
Saudi Arabia’s benchmark Tadawul All Share Index experienced a significant drop of 6.78 percent during today’s trading session, losing 805.46 points to close at 11,077.19. This marks its steepest single-day decline in months. The total trading volume for the index reached SR8.43 billion ($2.24 billion), with only one stock advancing and 252 retreating.
The MSCI Tadawul Index also saw a decline, falling by 98.60 points, or 6.56 percent to settle at 1,405.55.
Meanwhile, the Kingdom’s parallel market, Nomu, dropped by 1,992.71 points, or 6.5 percent, closing at 28,648.22. Notably, 89 listed stocks advanced in Nomu, while 11 retreated.
The worst performer of the day on the main market was Methanol Chemicals Co., whose share price fell by 10 percent to SR12.06, while the only positive performer stock was Nama Chemicals Co. with its share price surging by 0.5 percent to SR30.45.
In an interview with Arab News, Gaby Tchennozian, chief investment officer at a Dubai-based family office, highlighted that global market turbulence — triggered by an escalating US-led trade war—has not spared the Gulf region.
Gaby Tchennozian, chief investment officer at a Dubai-based family office. Supplied
“Even though the region isn’t directly involved in the trade tensions, the spillover is already being felt in markets,” he said.
Qatar’s QE Index declined by 4.23 percent, while Kuwait’s Premier Market Index dropped 5.69 percent. Other regional markets were similarly affected, with Muscat’s MSX 30 Index falling by 2.62 percent and the Bahrain All Share Index down by 1 percent. Investors are closely monitoring the impact of escalating trade tensions and the recent decline in oil prices.
This followed the announcement by US President Donald Trump of a 10 percent reciprocal tariff on Gulf imports.
Although UAE markets were closed on Sunday, the Abu Dhabi Securities Exchange ended the previous week with a 1.9 percent loss on Friday. Similarly, Dubai’s DFM General Index closed 1.5 percent lower on April 4, indicating that further declines could occur when trading resumes on Monday.
“For investors, the lesson isn’t just about reacting to headlines. It’s about building portfolios that can weather unexpected shocks,” Tchennozian noted.
In Egypt, trading was temporarily halted in several stocks on Sunday for 10 minutes after having dropped by 5 and 10 percent, in line with market regulations designed to prevent excessive volatility.
Tchennozian anticipates that market turbulence will persist for the next 2-3 months due to continued uncertainty.
While OPEC’s production increase was overshadowed by news of US tariffs, oil prices remain near GCC break-even levels. However, they could decline further if global trade weakens.
Potential rate cuts by the Federal Reserve may provide some relief, but tensions in the Red Sea are dampening market sentiment.
Tchennozian cautioned that if trade wars escalate or regional conflicts intensify, this volatility could extend well into late 2025.
Tariff turmoil rattles markets
The White House confirmed on April 2 that a 10 percent tariff on Gulf Cooperation Council imports, effective April 5, was imposed to address what President Trump described as “long-standing unfair trade practices.”
Although the Gulf states were spared from more severe penalties—41 percent for Syria and 39 percent for Iraq—the move has raised concerns about rising import costs for US-sourced goods, particularly in sectors like construction and electronics.
“These tariffs will remain in effect until such a time as President Trump determines that the threat posed by the trade deficit and underlying nonreciprocal treatment is satisfied, resolved, or mitigated,” the White House said in a statement on April 2.
Banking sector hit hardest
Gulf banking stocks were hit hardest amid growing fears of a potential US economic slowdown. The sell-off mirrored the steep losses seen on Wall Street on April 4, where the S&P 500 plummeted 9.58 percent, wiping out $5 trillion in market value and marking one of its worst declines in 70 years, according to Reuters.
The Nasdaq Composite Index also dropped by 5.8 percent on Friday, losing 962.8 points and officially entering bear market territory, driven by mounting global economic concerns.
Oil prices add to the pressure
Although the White House confirmed that oil and gas imports would be exempt from the new tariffs, Saudi oil giant Aramco still experienced a dip in market value during Sunday’s trading session. Its shares fell by 5.25 percent on Sunday to reach SR24.92, leading to a decrease of SR333.9 billion in market capitalization to settle at SR6.03 trillion.
For the GCC, the White House’s exemption is significant, as oil and gas constitute over 60 percent of Saudi Arabia’s exports to the US and remain a vital part of Gulf-US trade relations.
Oil prices plunged 7 percent on Friday, hitting a three-year low, after China retaliated in the escalating trade war by imposing 34 percent tariffs on all American goods, effective April 10.
This move, coinciding with global preparations for countermeasures against Trump’s tariffs—the highest in over a century—sent shockwaves through markets, with investors increasingly factoring in recession risks.
JP Morgan raised its forecast for a US and global recession to 60 percent, up from 40 percent, warning that escalating tariff tensions are undermining business confidence and threatening to derail global growth.
S&P Global also adjusted its “subjective” odds of a US recession, raising them to 30-35 percent, up from 25 percent in March.
Goldman Sachs had already revised its US recession risk to 35 percent from 20 percent ahead of the April 2 tariff announcement, citing weakening economic fundamentals.
HSBC noted on Thursday that the recession narrative is likely to strengthen, although markets have already factored in some of the risks.
Tchennozian further emphasized that Gulf markets are bearing the pressure as global indices continue to slump due to the ongoing US-led trade war. “GCC governments must act swiftly and decisively to reassure investors and safeguard their economies,” he said.
He suggested that this could be achieved by ramping up infrastructure spending while central banks ensure liquidity, particularly for small and medium enterprises.
Additionally, sovereign funds may need to step in with market stabilization measures, alongside diversifying trade toward Asia and Africa to mitigate the impact.
“Above all, clear and consistent communication from policymakers is key to reassuring investors that the region is not just weathering the storm—but actively steering through it,” he concluded.
ISLAMABAD: Two prominent institutes owned by the governments in China and Pakistan have signed a memorandum of understanding (MoU) to boost Pakistan’s cotton production through technological methods, state broadcaster reported on Sunday.
Cotton is one of Pakistan’s most important cash crops. At present, Pakistan is the fifth-largest producer of cotton and the third-largest producer of cotton yarn in the world, according to the Ayub Agricultural Institute.
Cotton has a 0.8% share in Pakistan’s GDP and a massive 51% share in the country’s total foreign exchange earnings. Cotton production in Pakistan has contributed to a vibrant textile industry with over 1,000 ginning factories and around 400 textile mills across the country.
“The MoU has been signed between the Ayub Agricultural Research Institute of Pakistan (AAIR) and the Institute of Cotton Research (ICR) of the Chinese Academy of Agricultural Sciences,” Radio Pakistan said in a report.
It said that as per the agreement, AAIR and ICR will work on genetically improving cotton to increase its production and promote Pakistan’s cotton industry globally.
ICR is China’s only state-level organization for professional cotton research. It focuses on basic and applied research, and organizes and presides over major national cotton research projects that address significant science and technology-related issues in cotton production.
Established in 1962, Punjab government’s AAIR describes itself as one of the country’s most prestigious research institutes that says its mission is to develop new varieties of crops and technologies for food safety.
The agreement takes place as Pakistan faces a surge in cotton imports this year due to low production. According to the Pakistan Central Cotton Committee, factories in Pakistan have received 5.51 million bales of cotton as of January this year, a significant decline of 34% compared to last year.
Pakistan’s eastern Punjab province, which produces the most cotton out of all provinces in the country, grew 2.7 million bales, a decline of more than 36% compared to last year.
Experts blame the low production of cotton due to irregular weather patterns brought about by climate change.
