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SAUDI BUSINESS AND CONSUMER RECOVERY CONTINUES UNABATED

Saudi Arabia’s business and consumer sentiment has not only rebounded, but surpassed pre-COVID-19 highs in some areas.

The latest purchasing managers’ index (PMI) from IHS Markit saw another rapid improvement in business activity, with the fastest upturn in new orders since January. The country’s PMI stood at 56.4 points, suggesting a robust expansion in the non-oil private sector.

Business conditions have now improved in each of the past 10 months as the sector recovers from the impact of the COVID-19 pandemic, noted IHS Markit Economics.

“Demand growth in the Saudi Arabian non-oil sector ramped up again in June, with the latest data signalling the strongest rise in sales since January,” noted David Owen, economist at IHS Markit. “The rollout of COVID-19 vaccines and easing of restrictions also helped to lift confidence for future activity to a five-month high, as firms hope that the economic recovery will accelerate over the second half of the year.”

More crucially, employment accelerated to a 19-month high as businesses eyed greater economic activity in the near future.

“Employment numbers meanwhile rose at the quickest pace since November 2019, although job creation was still only marginal and lagged well behind the rate of new order growth,” Owen noted. “Further increases in sales should encourage firms to expand their workforces, particularly as the outlook for future business conditions looks promising.”

CONSUMER CONFIDENCE

Consumer confidence is also exceeding global peers. The 23-nation IPSOS Global Consumer Index shows Saudi Arabia was ranked second only to China in terms of consumer sentiment.

At 65.7 points, Saudi consumer confidence surpassed United States (61.7), Sweden (58.8), Australia (56.7), Great Britain (55.2), Germany (54.9), India (51.2) and Canada (51.1). Only Chinese consumers, at 72.8 points, were more upbeat about future prospects.

ECOMMERCE BOOST

The retail sector is expected to receive a major boost with the rebranding of Saudi Post and Logistics (SPL). COVID-19 has accelerated ecommerce with parcel service providers and logistical and transportation companies emerging as vital links in the retail supply chain.

Saudi Arabia is the world’s 26th largest market for ecommerce with sales of USD 6.3 billion in 2020, according to EcommerceDB, noting that 69% of the Saudi Arabian population bought at least one product online in 2020.

“Market expansion in Saudi Arabia is expected to continue over the next few years, as indicated by the Statista Digital Market Outlook. It has been predicted that the compound annual growth rate (CAGR 20-24) for the next four years will be 7%,” EcommerceDB noted.

Fashion is the largest ecommerce segment in the kingdom and accounts for 33% of ecommerce revenue, followed by electronics and media with 31%, food and personal care with 21%, toys, hobby and DIY with 10% and furniture and appliances with the remaining 5%, EcommerceDB added.

Saudi Central Bank data shows there were more than 66.17 billion ecommerce transactions in the first quarter of 2021, valued at SAR 13.86 billion – the highest ever in the kingdom both in terms of transactions and value.

These figures will likely surge as SPL expands its offerings in line with the Saudi Vision 2030, and as it pursues a privatisation process.

“We are going through a process of privatisation – moving from government ownership to private ownership. Accordingly, we need to raise the quality of service and reduce the costs to government,” according to Eng. Anef bin Ahmad Abanomi, Saudi Postal Corporation president.

“The market overall has been changing dramatically during the past few years. Mail volume has been falling while ecommerce and parcels delivery is rising exponentially. Financial services are also on the rise. There is also a growing demand for specialised logistics services; and all this is going on against a background of the disruptions caused by technology.”

The company aims to build on its 550 branches and agencies, more than 500,000 post office boxes, 60 parcel stations in 30 cities, 13 sorting centres and an 840-vehicle fleet.

“Our mission, is to be the modern logistics arm of KSA commerce and government digitisation, providing top quality service to our customers,” the president noted. “SPL will reflect the aspirations of our confident nation for a future in which we will become the crossroads of global trade routes, a centre connecting the four corners of the world and a logistical hub which will transform the kingdom into a global logistical platform.”