Though the price of oil is headed for its biggest monthly decline since December 2008 amid European worries and as dollar soared to a 22-month peak against the European single currency, growth in the Saudi non-oil export has been robust in recent months as reflected by an average growth rate of 31 percent in 2011, Al Rajhi Capital said in its May Monthly Economic Report released Wednesday.
Brent North Sea crude for July slid to $103.69 per barrel, touching the lowest point since December 19, before stabilizing.
New York’s main contract, West Texas Intermediate (WTI) crude for delivery in July dropped to $88.17 a barrel, striking a level last seen on October 24.
Al Rajhi report said average monthly growth in Q1-2012 has eased to 16 percent primarily because of 1 percent growth in March. These numbers are likely to be revised up. Petrochemicals has taken over plastic as the largest constituent of then non-oil export. Its share has moved up to 33 percent in March 2012 compared to 30 percent in 2010 whereas plastic has retained its share at 32 percent. Non-Arab Asian countries continue to be the main destination of non-oil export from the country. China, Singapore and India together receive almost 21 percent of the non-oil exports. European Union countries get 12 percent.
Standard deviation of annual growth rates of non-oil export was 20.4 percent whereas that of the total export and the oil export was 25.9 percent and 29.2 percent, respectively. The volatility in non-oil export growth reduced significantly in 2001-2010 period where as those of oil export and total export remained at high levels. The standard deviation of annual growth of non-oil export declined to 13.2 percent during 2001-2010 whereas that of total export and oil export was 25.2 percent and 27 percent, respectively, the report noted.
Moreover, the compounded annual growth rate (CAGR) of non-oil export was 12.3 percent during the period of 1985-2000 which jumped to 20.4 percent during 2001-2010.
On the other hand, growth rates in oil export and total export have been lower compared to growth in non-oil export in both periods. Oil export grew at CAGR of 5 percent during 1985-2000 and at CAGR of 17.4 percent during 2001-2010. Growth in the total export was 5.4 percent and 17.7 percent during 1985-2000 and 2001-2010 periods, respectively.
Even though growth rate of non-oil export has been higher compared to that of oil export, volatility in non-oil export has been lower. The volatility measured in terms of standard deviation of annual growth rates shows that volatility in non-oil growth was almost 5 percent less than that of total export and 9 percent less than that of oil export during 1985-2001, Al Rajhi Capital said.