In a significant turnaround, Saudi Arabia's industrial production demonstrated a robust recovery in July 2024, with the industrial production index reaching a noteworthy 106.2. This figure represents an increase of 1.6% compared to the previous year and a commendable 1.7% on a month-to-month basis. The recovery comes on the heels of a downturn earlier in the year, where the index had plummeted to 104.4 in June 2024, down from 107.6 in May 2024 and a previous high of 110.1 in June 2023. Despite the oil-rich kingdom implementing cuts to its oil production — reducing output to 8.9 million barrels per day during this reporting period — the overall figures for industrial production remained optimistic.
It is noteworthy that the reduction in oil output impacted mining and quarrying activities negatively, leading to a decline of 0.8% year-over-year, and oil-related operations faced a dip of 1.1%. Furthermore, production in the manufacturing of coke and refined petroleum products experienced a downturn of 2.2%, reflecting the broader challenges faced by the energy sector.
However, these challenges have not hindered the momentum in other areas. On a brighter note, the industrial production index for non-oil activities has soared to 129.3, achieving its highest level in over a year and a half. This surge was largely driven by a robust growth across all non-oil economic sectors, leading to an impressive 8.2% increase year-over-year. The manufacturing sector has been a significant contributor to this positive trend, with the sub-index for manufacturing activities rising by 4.6% annually.
Key areas of growth included a remarkable 5.7% increase in chemical production alongside a notable 10.1% rise in food manufacturing, underscoring the diversification efforts within the kingdom's industrial base. Additionally, there was a robust 8.2% increase in activities related to electricity, gas, steam, and air conditioning supplies.
Water supply, sewerage, and waste management services also demonstrated a steady growth, with a 1.1% increase in these essential services. The current trends highlight the resilience of Saudi Arabia's industrial landscape as it navigates challenges in its oil sector while diversifying its economic base toward non-oil industrial activities..