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Industrial output staged a recovery in 2025, with the annual Industrial Production Index (IPI) rising 5.1% y-o-y compared to 2024, according to Gastat’s latest data (pdf) — reversing two consecutive years of contraction that saw the index fall 5.3% in 2023 and 2.3% in 2024. However, while the headline looks broad-based, the composition is less convincing.
The breakdown
The top line: The annual IPI for oil activities rose 5.4% in 2025 and non-oil activities grew 4.3%. Mining and quarrying — the IPI’s dominant component — rose 5.8% y-o-y, underpinned by a 5.4% increase in oil activities and the primary driver of the headline figure.
Manufacturing rose 3.9%, but the gains were concentrated in petrochemical-adjacent sub-sectors led by chemicals and chemical products (up 9.3%) and coke and refined petroleum products (up 3.7%). Food products, which grew 2.9%, was the one genuinely non-oil bright spot in the sub-index.
On the utilities front, electricity, gas, steam, and air conditioning supply grew 5.2%, while water supply, sewerage, and waste management posted the sharpest sectoral gain at 10%, though its weight in the overall index is limited.
The real read
The recovery is real — but it’s still running on hydrocarbons. Non-oil manufacturing growth of 4.3% is still anchored to petrochemicals rather than genuinely diversified industrial output. Until food, non-metallic products, and other non-hydrocarbon sub-sectors start pulling their weight, the IPI reflects an oil cycle more than a diversification story.
And 2026 is off to a rough start. The index dropped 19.1% in April and 14.1% in March due to slowing mining and manufacturing activities and disrupted production and investment timelines from geopolitical tensions and the Strait of Hormuz’s closure.
