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RIYADH: ��������’s industrial production climbed 7.9 percent year on year to 111.9 in June, driven by a sharp rebound in manufacturing and higher crude output, official data showed. 

Figures from the General Authority for Statistics also revealed a 1.6 percent month-on-month rise in the Industrial Production Index, underscoring momentum in the Kingdom’s non-oil economy. 

The IPI, which measures changes in industrial output across mining, manufacturing, utilities, and waste management, is a key indicator for ��������’s Vision 2030 diversification drive. 

The June IPI figure, reflecting continued growth in the manufacturing sector, affirms ��������’s progress in its economic diversification efforts aimed at reducing its decades-long reliance on crude revenues. 

In its latest report, GASTAT stated: “Preliminary results indicate a 7.9 percent increase in the IPI in June 2025 compared to the same month of the previous year, supported by the rise in mining and quarrying activity, manufacturing activity, electricity, gas, steam, and air conditioning supply activity and water supply, sewerage and waste management and remediation activities.”   

Mining and quarrying — which include crude oil production — increased 6 percent annually as Saudi output rose to 9.36 million barrels per day, up from 8.83 million bpd in June 2024.  

The authority revealed that the sub-index for manufacturing activities rose 11.1 percent year on year in June, supported by an increase in the manufacture of coke and refined petroleum products, which jumped 15.3 percent, and the production of chemicals and chemical products, which rose 18.7 percent. 

In May, a separate report released by GASTAT revealed that the Kingdom’s gross domestic product grew 2.7 percent year on year in the first quarter, driven by strong non-oil activity. 

Commenting on the GDP figures, ��������’s Minister of Economy and Planning, Faisal Al-Ibrahim, who also chairs GASTAT’s board, said at the time that the contribution of non-oil activities to the Kingdom’s economic output reached 53.2 percent — an increase of 5.7 percent from previous estimates. 

The sub-index of electricity, gas, steam, and air-conditioning supply activity increased 5.6 percent in June, compared to the same month in 2024. 

The authority added that the sub-index of water supply, sewerage, waste management, and remediation operations increased 6.9 percent year on year in June. 

Overall, the index of oil activities advanced 7.7 percent year on year in June, while the index of non-oil activities rose 8.6 percent during the same period. 

On a monthly basis, manufacturing activity in �������� increased 1.4 percent, supported by growth in the production of coke and refined petroleum products, which rose 1.7 percent. 

Compared to May, mining and quarrying activities in the Kingdom also increased 1.9 percent in June. 

Overall, the index of oil activities increased 1.9 percent in June from May, while non-oil activities expanded 1.1 percent during the same period. 

The Industrial Production Index measures changes in industrial output based on the International Standard Industrial Classification framework, covering mining, manufacturing, utilities, and waste management sectors. 

S&P Global data show the Kingdom’s non-oil private sector remained robust in July, with its Purchasing Managers’ Index at 56.3, outpacing the UAE at 52.9, Kuwait at 53.5, and Qatar at 51.4. 

��������’s transportation boom opens doors for private investment

RIYADH: ��������’s rapidly expanding transportation sector is unlocking new investment opportunities for private players, both local and global, experts have told Arab News.

Central to the Kingdom’s Vision 2030 strategy, transportation development is seen as a key enabler for economic diversification and the drive to position �������� as a global logistics, tourism, and business hub.

With a growing emphasis on public-private partnerships, Minister of Transport and Logistic Services Saleh Al-Jasser announced during the third PIF Private Sector Forum, held in Riyadh in February,  that private entities are expected to contribute around 80 percent of the targeted investments in the country’s transport and logistics sector. 

He added that the total value of projects offered to the private sector — through privatization and other models — could reach SR240 billion ($63.95 billion).

Joseph Salem, partner and travel, transportation and hospitality practice lead at Arthur D. Little, Middle East, told Arab News that public-private partnerships are at the core of this strategy. 

“Privatization of key transport infrastructure, such as ports and airports, is creating new opportunities for private investment,” he said, adding: “The development and management of cargo terminals through PPP agreements are attracting private efficiency and capital. The construction and engineering sectors are also benefiting, with numerous megaprojects like the Riyadh Metro and Neom’s mobility network.”

Alessandro Tricamo, partner at Oliver Wyman’s transportation and services practice for India, the Middle East, and Africa, echoed similar sentiments and emphasized the importance of selecting suitable assets to attract investors.

“Globally, asset classes such as airports and seaports are typically considered bankable, with the potential to generate strong returns and attract private investment. Conversely, railways and public transport systems often require structured support from the government to become commercially viable,” said Tricamo.

He added: “In the Kingdom, there’s still a need to refine how these projects are structured and presented to the private sector, as expectations are sometimes misaligned with market realities. Clear, realistic frameworks will help unlock greater private sector involvement and broaden the Kingdom’s business landscape.”

The Kingdom’s logistics infrastructure is expanding rapidly. According to a report released by the General Authority for Statistics in December, the number of logistics facilities in the country has increased by 267 percent since 2021, with the Eastern Province leading in logistics hubs spanning 6.3 million sq. meters.

“Private companies are seizing opportunities in trucking, warehousing, freight forwarding, and e-commerce delivery services. Technology firms are also entering the market, offering solutions in AI, electric vehicles, and autonomous transport,” said Salem.

He added: “Overall, the transportation revolution in �������� is creating a more diversified and competitive business environment. Private sector involvement is key to realizing the Kingdom’s ambitious Vision 2030 goals.”

Transportation as a growth enabler

Anthoine Barthes, vice president of Al-Futtaim Automotive, told Arab News that transportation infrastructure underpins nearly every pillar of Vision 2030, acting as a foundation for economic growth.

According to Barthes, transportation is not only about mobility but also about creating links between economic zones, facilitating trade, drawing investment, enhancing quality of life, and boosting tourism.

“A key objective is for �������� to become a global logistics hub, and this requires state-of-the-art ports, efficient rail networks, extensive road infrastructure, and modern airports capable of handling significant cargo and passenger volumes,” said Barthes.

He also pointed to the Riyadh Metro — with its six lines spanning 176 km — as evidence of the Kingdom’s progress in developing effective public transport systems.

“These efforts, alongside continuous improvements to road infrastructure and the integration of smart city mobility solutions, are crucial for enhancing the quality of life, mitigating urban congestion, and fostering sustainable urban growth,” added Barthes.

Salem noted that infrastructure development supports the growth of multiple industries, including tourism and entertainment, with road upgrades linking key cities to rising destinations such as Qiddiya and Amaala.

He also highlighted how enhancements around Makkah and Madinah have improved accessibility for millions of religious visitors, reinforcing tourism and Umrah growth.

Integrated logistics backbone

Tricamo underlined that efficient logistics and supply chain management are fundamental to sustained economic development.

“A well-connected transport network that links urban and industrial centers and facilitates the smooth movement of goods and people is a key enabler of the Kingdom’s broader economic ambitions. It directly impacts the reliability, speed, and cost-effectiveness of supply chains,” said Tricamo.

Arthur D. Little’s Salem believes that infrastructure modernization and the integration of advanced technologies are strengthening the Kingdom’s global supply chain footprint. He pointed to ��������’s rise in the World Bank’s Logistics Performance Index, climbing 17 spots to rank 38th globally in 2023.

“Vision 2030 also focuses on expanding multi-modal freight capacity. The rail network will grow from 3,650 km to 8,000 km, enhancing logistics. Air cargo capacity is set to increase to over 4.5 million tonnes annually by 2030, while Saudi ports will handle up to 40 million TEUs,” said Salem.

He added: “Additionally, 40 new logistics centers across 100 million sq. meters will attract global companies, positioning �������� as a logistics hub. These efforts are expected to reduce logistics costs, improve reliability, and grow the sector to $57 billion by 2030.”

Impact on the business landscape

Barthes said ongoing advancements in the Kingdom’s transport infrastructure are expected to reshape the business environment.

He noted that reduced logistics costs, quicker deliveries, and agile supply chains will benefit a wide range of industries.

“A world-class infrastructure is a primary magnet for foreign direct investment. International companies are more willing to establish operations, knowing they can efficiently move goods and people,” said Barthes.

Salem emphasized how transportation development enhances the ease of doing business and improves trade connectivity through upgraded logistics hubs.

“The growth of tourism, retail, and real estate sectors is another benefit. Better transportation networks make it easier for people to travel and for goods to be delivered, driving demand in these industries,” said the Arthur D. Little partner.

He added that modernized ports, roads, and rail corridors are boosting trade volumes, while domestic improvements in connectivity are helping to meet growing internal demand across agriculture, retail, and construction.

Technology-driven transformation

Tricamo highlighted the vital role of digital innovation in shaping ��������’s future transport ecosystem.

“Digital solutions — from smart ticketing and real-time tracking management systems — will be essential for building a future-ready, user-centric transport ecosystem,” he said.

Salem echoed these views, noting the Kingdom’s strong push for smart infrastructure, digital logistics, and electric mobility.

He added that electric vehicles are reshaping transportation, supported by investments in thousands of fast-charging points across 1,000 locations by 2030. The goal is to have 30 percent of vehicles in Riyadh electrified by then.

“Smart cities like Neom are integrating IoT sensors, AI-driven traffic management, and predictive congestion systems to optimize transportation. These technologies improve traffic flow, reduce accidents, and enhance the overall commuter experience. In logistics, automation and AI are being used to streamline freight operations, reduce errors, and optimize delivery routes,” said Salem.

Overcoming challenges

Salem acknowledged that the Kingdom faces hurdles such as overreliance on road transport, the country’s vast geography, regulatory bottlenecks, skill shortages, and climate-related challenges.

He emphasized that the government is proactively addressing these with targeted initiatives.

“To reduce reliance on roads, �������� is investing heavily in rail and public transit projects like the Riyadh Metro. The vast size of the Kingdom is being addressed by extending transportation networks to remote areas, ensuring equitable access to modern infrastructure,” said Salem.

He added that regulatory reforms, including the establishment of the National Center for Privatization, are streamlining approval processes and attracting private sector investment. 

“Through partnerships with global firms, �������� is transferring knowledge and building local expertise to overcome skills gaps,” said the Arthur D. Little partner.

Tricamo pointed to the scale of investment as the primary challenge facing transport infrastructure expansion.

“In ��������, the ambitious scope and accelerated timeline of Vision 2030 add further complexity, requiring multiple high-value infrastructure projects to be developed simultaneously. The private sector can play a key role in easing this burden,” he said.

The Oliver Wyman partner concluded by emphasizing the need for careful asset selection to balance commercial viability and government support.