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Sila Consumer Sentiment Index – Saudi Arabia: November, 2021

December 13, 2021

The GCC’s largest economy has seen the consumer sentiment index rise to a net positivity of 50.2% in November. Since a decline from August’s 51.7% to 47.5% in September, confidence has been recovering steadily, after registering at 49.6% in October. While this has largely been propelled by growth in general economic confidence, it must be noted that the KSA is one of the GCC’s more sluggish economies in terms of consumer sentiment, with the index still well below the pre-pandemic summit of 69.9%.


Private business confidence has experienced a relatively flat gain, from 30.1% in October to 30.8% in November, which effectively translates to a net negative trend (from the pre-pandemic, series peak of 50.5% in January 2020). This is caused by significant supply-side constraints, in addition to the fact that most of the commerce has not been meaningfully influenced by local businesses. Rather, it is mostly stimulated by international and governmental business activity, which marks a notable point of departure for the Saudi economy from the rest of the GCC. Foreign enterprises in the KSA market enjoy a robust advantage over the local economy and private sector, where performance lags in comparison to the achievements lauded by the country’s economic headlines.

Factors such as earnings and indexes provide ample indication of the latter. Even though Saudi Arabia’s stock exchange is at record highs, the price-to-earnings ratios, for instance, are outsized when evaluated against the global averages that one might expect to see in similar conditions.


Conversely, it is the macroeconomic factors that are mostly responsible for the confidence in the KSA’s economy, which now stands at a series high of 85.8% net positivity. These include higher oil prices, substantial liquidity in the market, as well as improved business conditions related to government entities and real estate projects, factors like IPOs, and large-scale event announcements. The solid net positivity of consumers towards the economy also reflects a formidable push by the government to support the recovery. When assessed against the pre-pandemic net positivity of 32.1%, and a 75.9% net negative value in January of 2020, the current net positivity of 85.8% (and only 14.2% net negativity) denote a major shift, not least with respect to macroeconomic conditions.


Saudi Arabia’s employment index remains essentially unchanged over the past three months, although at the current 86%, it is nevertheless below the series high of 93.8% seen earlier in June of this year. The near-full confidence in employment (up from October’s 85.9%) is still hovering beneath the pre-pandemic highs of 90.5% but is a vital indicator in countries like the KSA of the economy’s appetite for big-ticket items such as automobiles and consumer white goods. We are also witnessing a relatively high level of discretionary purchasing, with conditions expected to continue to improve for this particular sector of the economy.

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