Affirming the progress of Saudi Arabia’s economic diversification journey, the Kingdom’s Industrial Production Index (IPI) rose by 3.2 percent in April 2023 compared to the same month the previous year, according to official data released by the General Authority for Statistics. This positive growth in the IPI was primarily driven by high production in mining and quarrying, manufacturing activities, and electricity and gas supplies.
The IPI serves as an economic indicator reflecting the relative changes in the volume of industrial output in Saudi Arabia, calculated based on the industrial production survey. The relative weights of the mining and quarrying, manufacturing, and electricity and gas supply sectors in the Industrial Production Index are 74.5 percent, 22.6 percent, and 2.9 percent, respectively. Consequently, the trend in the mining and quarrying sector has a dominant influence on the overall Industrial Production Index.
Comparing April 2023 to April 2022, Saudi Arabia’s mining and quarrying activities experienced a modest growth of 0.2 percent. This increase can be attributed to the Kingdom’s efforts to boost its oil production to more than 10 million barrels per day during the month. Meanwhile, manufacturing activities witnessed a substantial rise of 10.5 percent in April 2023 compared to the same period the previous year. Furthermore, electricity and gas supplies saw a significant surge of 25.5 percent during the same period.
However, it should be noted that Saudi Arabia’s Industrial Production Index in April 2023 experienced a slight decline of 0.3 percent compared to March of the same year. This decrease was primarily driven by a 2 percent drop in manufacturing activities during that month.
Earlier in April, the Ministry of Industry and Mineral Resources reported that investments in Saudi Arabia’s manufacturing landscape had reached an impressive figure of SR495 billion ($132 billion) within a span of just seven years since the launch of Vision 2030 in 2016. The report also highlighted that the Kingdom had issued over 2,000 new licenses for various projects aimed at enhancing its domestic manufacturing capacity. These initiatives have contributed to the creation of approximately 193,000 new jobs within the industrial sector since 2016.
Furthermore, in March, Saudi Arabia’s Deputy Minister of Industry and Mineral Resources, Osama bin Abdulaziz Al-Zamil, revealed that the number of factories in the Kingdom had increased by 50 percent since the launch of Vision 2030. These developments reflect the successful execution of the economic diversification plan and demonstrate Saudi Arabia’s commitment to reducing its reliance on oil revenues.
The rise in Saudi Arabia’s IPI, particularly in mining and quarrying as well as manufacturing activities, underscores the positive trajectory of the country’s economic diversification efforts. The substantial investments and new project licenses within the manufacturing sector demonstrate the Kingdom’s commitment to nurturing a robust industrial base. With continued focus on such initiatives, Saudi Arabia is poised to achieve its Vision 2030 goals and establish itself as a diversified and thriving economy on the global stage.
