Saudi Arabia’s IHS Market Purchasing Managers’ Index (PMI) rose to 50.7 from 48.8 in August, breaking the 50 th barrier between growth and contraction for the first time since February before the start of the pandemic.
“Business activity in the non-oil private sector in Saudi Arabia increased in September, supported by the return to sales of growth, as the economy began to adjust its course after the lockdown caused by Covid-19,” said David Owen, economist at IHS Markit.
The rate of growth in the non-oil sector during the month of September compared to 48.8 in August
“In addition, the impact of the hike in value tax has receded significantly after August witnessed a significant increase in prices and a decrease in sales. Cost inflation has fallen to a rate that is only marginal. ”
Saudi Arabia, the world’s largest oil exporter, tripled its value-added tax in July to 15 percent in an effort to shore up state coffers hit hard by the drop in oil prices and cuts in crude production, a move economists said would likely slow the economic recovery from the resulting downturn. On the pandemic.
Business conditions deteriorated in August, partly due to the impact of VAT on consumer spending and on corporate input costs.
The survey said the increase in input costs in September was much lower as the tax impact greatly diminished. But labor markets remained lackluster, with hiring activity falling for the eighth consecutive month.
Saudi Arabia said last week that unemployment among Saudi citizens rose to an unprecedented level of 15.4 percent in the second quarter of the year, while the economy shrank by 7 percent.
Owen said the Saudi economy still had “some way to go towards a full recovery.”
Output growth remains well below normal and jobs are still declining, albeit at a slower pace. Companies will need a steady increase in sales that supports a strong year-end. ”
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