The strong turnaround in Saudi Arabia’s non-oil exports in September was led by a robust surge in petrochemicals, electrical equipment and vehicle exports.

Non-oil exports overall rose 8.8% in September compared to August, while year-on-year gains stood at 40.6%, according to the General Authority for Statistics (GSTAT).

Among the biggest exports, products of chemical or allied industries expanded 136.8% to SAR 5.8 billion, as against the same period last year. Machinery and mechanical appliances and electrical equipment climbed 94% to SAR 922 million, while vehicles and associated transport equipment grew 38.4% during the period.

China was Saudi Arabia’s number one destination for non-oil exports, with SAR 2.8 billion shipped to the Asian giant in September alone, an impressive 102.4% increase over the same period last year, as the kingdom’s trade overtures and investment focus paid off.

The UAE was the second largest export destination, rising 24.4% to SAR 2.56 billion. Singapore was the third largest market for non-oil Saudi exports, up 19.9% to SAR 1.09 billion. In addition, the kingdom’s non-oil exports to India and Egypt posted impressive gains of 95.5% and 73.2%, respectively.

Oil exports were no laggards here. The country exported SAR 79.46 billion in September, a 5.5% increase month on month, and 55.5% increase year on year, as oil prices rose and Saudi crude oil output surged. It was easily the best export figures for the country in more than a year.

Merchandise imports jumped 15.4% during the month. However, year-on-year growth is a more subdued 9.5%, as the kingdom has looked to substitute imports with local produce in some areas. Four of Saudi Arabia’s biggest import items were down. Machinery and mechanical appliances and electrical equipment slid 0.3% to reach SAR 8.54 billion, while vehicles and associated transport equipment declined 3% to SAR 5.65 billion.

China was the biggest importing country, followed by the United States, UAE, Germany and Japan.

The trade balance of SAR 58.83 billion in Saudi Arabia’s favour is near its highest level in a year, and second only to the SAR 59.9 billion achieved in June of 2018.

Growing non-oil trade is a key target of the Saudi economy and this is re-enforced by other regional countries that are also eager to expand trade with the kingdom, drawn by its economic potential

Indeed, Saudi Arabia and other regional countries are working towards a common goal of increasing trade and investment ties, as part of their diversification strategy.

The Organization of Islamic Countries (OIC) latest report, shows member countries had an impressive export growth spurt in 2017. The increase in exports of Indonesia, Malaysia, Saudi Arabia and the UAE accounted for roughly 53% of the increase in total exports from OIC countries

Among the leading countries in intra-OIC trade in 2017, UAE ranked first, followed by Turkey, Saudi Arabia, Indonesia and Malaysia. The top 10 countries accounted for 73.6% of the intra-OIC trade.

The United Arab Emirates took the lead in intra-OIC exports in 2017 by realising 22.2% of the total intra-OIC exports and was followed by Saudi Arabia (15.2%) and Turkey (14.1%). These three countries as a whole account for almost (51.5%) half of intra-OIC exports,” OIC said in its report.

Saudi Arabia also emerges as a top three trade export or import destination for most OIC members, which suggests that the kingdom is increasing its trade ties with its neighbours, including Bahrain, Jordan, Somalia, Algeria, Bangladesh, Djibouti, Egypt, Indonesia and Iraq.

The International Monetary Fund (IMF) noted that since 2000, the GCC’s trade in goods and services grew at an average real rate of 7.5%, almost twice that of real GDP growth, compared with the global averages of 4.8% and 3.8%, respectively.

Meanwhile, the UAE and Saudi Arabia account for more than 75% of travel receipts in the region, given their leading position as leisure and religious tourism destinations, respectively.

But there is more work to be done to foster greater and deeper trade and investment ties.

Reducing non-tariff barriers and enhancing integration into regional and global value chains are needed to increase the tradable non-oil sector,” the IMF said in a report focused on boosting regional trade.

Given that low intra-GCC trade is mostly due to similar economic structures of the member countries, greater regional trade can be boosted by diversifying the economy toward tradables.

Considering that regional trade accounts for roughly 11% of the Arabian Gulf countries’ overall trade, compared to, for example, more than 20% for the Association of Southeast Asian Nations (ASEAN), there is lot more scope to boost trade ties with neighbouring countries, before looking further ashore.