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Arab News
13 hours ago
- Business
- Arab News
Saudi Arabia's economic resilience shines in Q1 2025
According to estimates by the General Authority for Statistics, Saudi Arabia's real gross domestic product grew by 3.4 percent in the first quarter of 2025 compared to the same period in 2024. On a seasonally adjusted basis, real GDP rose by 1.1 percent compared to the fourth quarter of 2024. Non-oil activities grew by 4.9 percent year-on-year and 1 percent quarter-on-quarter. Government activities expanded by 3.2 percent year-on-year and 5.5 percent quarter-on-quarter. In contrast, oil activities declined by 0.5 percent year-on-year and 1.2 percent from the previous quarter. Despite the drop in oil activities, most economic sectors recorded annual growth. For example, wholesale and retail trade, along with restaurants and hotels, recorded the highest growth among non-oil sectors in Q1 2025, rising by 8.4 percent year-on-year and 7 percent quarter-on-quarter. This was followed by transport, storage, and communication activities, which expanded by 6 percent year-on-year and 1.8 percent quarter-on-quarter. Additionally, financial, insurance and business services grew by 5.5 percent compared to the same quarter last year, despite a slight quarter-on-quarter decline of 1 percent. The growth in non-oil activities aligns with Saudi Vision 2030, which aims to boost non-oil revenues and diversify the economy to offset potential declines in oil income due to global price volatility or shifts in demand — especially in light of voluntary and mandatory production cuts by OPEC+. As a result of government initiatives, non-oil activities now account for 53.2 percent of GDP, marking a significant step toward achieving the country's diversification goals. The Kingdom's real GDP growth in Q1 2025 was primarily driven by strong non-oil activities, including government-led projects, despite a decline in the oil sector Government activities are significantly contributing to the Kingdom's GDP growth through both direct economic output and broader support. For example, gross fixed capital formation rose by 8.5 percent year-over-year and 7.3 percent quarter-on-quarter, while government final consumption expenditure increased by 5.2 percent year-over-year and 4.5 percent quarter-on-quarter. Meanwhile, private final consumption expenditure grew by 4.5 percent year-over-year but declined by 1.7 percent quarter-on-quarter. In trade, imports rose by 2.7 percent year-over-year but fell by 10 percent quarter-on-quarter. Exports, on the other hand, increased by 1.5 percent year-over-year and surged by 12.3 percent quarter-on-quarter. The rise in fixed capital formation played a key role in supporting the Kingdom's economic performance in Q1 2025, aligning with the goals of Vision 2030 for economic diversification. This growth reflects the government's continued investment in major infrastructure and development projects tied to Vision 2030, including New Murabba, Rua Al-Madinah, Soudah Peaks and other transformative ventures. In conclusion, the Kingdom's real GDP growth in Q1 2025 was primarily driven by strong non-oil activities, including government-led projects, despite a decline in the oil sector. This increase highlights the Kingdom's economic resilience and adaptability amid global declines in oil prices and production. It also reflects the dynamism of the evolving economic landscape, propelled by momentum in non-oil sectors and supported by prudent government policies and strategic investments. Ultimately, this growth underscores steady progress toward achieving Vision 2030 objectives. Finally, it demonstrates the economy's agility in responding to global challenges and its ability to maintain balanced growth, which is essential for sustainable prosperity in the coming quarters. • Talat Zaki Hafiz is an economist and financial analyst. X: @TalatHafiz
Arab News
5 days ago
- Business
- Arab News
FDI into developing economies slumps to lowest level since 2005: World Bank
RIYADH: Foreign direct investment flows into developing economies dropped to $435 billion in 2023, the lowest level since 2005, as rising trade barriers, geopolitical tensions and growing fragmentation curbed cross-border investment. In its Global Economic Prospects report, the World Bank said FDI into advanced economies also dropped, sinking to $336 billion — the weakest level since 1996. While data for the 2023 calendar year is the latest available from the World Bank, net FDI into Saudi Arabia — one of the world's top emerging markets — reached SR22.1 billion ($5.89 billion) in the fourth quarter of 2024, representing a 26 percent increase compared to the previous three months, according to the Kingdom's General Authority for Statistics. Saudi Arabia is aiming to attract $100 billion in FDI annually by the end of this decade, as it seeks to make significant strides in diversifying its economy and reducing its decades-long dependence on oil revenues. Commenting on the findings, Indermit Gill, chief economist and senior vice president of the World Bank Group, said: 'What we're seeing is a result of public policy. It's not a coincidence that FDI is plumbing new lows at the same time that public debt is reaching record highs.' He added: 'Private investment will now have to power economic growth, and FDI happens to be one of the most productive forms of private investment. Yet, in recent years, governments have been busy erecting barriers to investment and trade when they should be deliberately taking them down. They will have to ditch that bad habit.' FDI inflows to developing countries in 2023 accounted for just 2.3 percent of their combined gross domestic product — about half the share recorded in the 2008 peak. The report noted that inflows had expanded rapidly in the 2000s, peaking at nearly 5 percent of GDP in 2008, but have since steadily declined. Between 2012 and 2023, two-thirds of FDI into developing countries was concentrated in just 10 markets. China captured nearly a third of the total, while Brazil and India accounted for about 10 percent and 6 percent, respectively. Advanced economies accounted for nearly 90 percent of total FDI in developing economies over the past decade, with about half of that originating from the EU and the US, the World Bank noted. Earlier this month, global credit rating agency S&P Global said FDI inflows into Gulf Cooperation Council countries are expected to slow in 2025 due to rising investor uncertainty. The outlook reflects shifting US trade policies, lower oil prices, and a more gradual rollout of economic diversification projects in the region. S&P Global also forecast a net negative impact on global FDI in the near term, driven by the indirect effects of US tariffs, a weaker oil price outlook, and declining global investor confidence. Combating challenges and easing restrictions The World Bank urged developing nations to ease investment restrictions that have accumulated in recent years, promote trade integration, and broaden participation in their economies. Ayhan Kose, the World Bank Group's deputy chief economist and director of the Prospects Group, said the sharp drop in FDI for developing countries 'should sound alarm bells.' He added: 'Reversing this slowdown is not just an economic imperative — it's essential for job creation, sustained growth, and achieving broader development goals. It will require bold domestic reforms to improve the business climate and decisive global cooperation to revive cross-border investment.' The report also outlined policy priorities for developing economies to increase FDI, including accelerating improvements in the investment climate — progress that has stalled in many countries over the past decade. Saudi Arabia is among the countries making notable strides to attract FDI by introducing regulatory reforms aimed at easing restrictions. In August, the Kingdom approved an updated investment law designed to boost transparency and simplify the investment process, as part of broader efforts to facilitate and expand FDI. The updated rule also promises enhanced protections for investors, including adherence to the rule of law, fair treatment, and property rights, alongside robust safeguards for intellectual property and seamless fund transfers. In April, Saudi Arabia rose to 13th place in Kearney's 2025 Foreign Direct Investment Confidence Index, up from 14th in the previous year's ranking. The Kingdom also retained its position as the third-most attractive emerging market, signaling continued global confidence in its transformation strategy. Kearney noted that the ranking reflects Saudi Arabia's bold, reform-driven approach to building an internationally competitive, future-ready economy. The World Bank emphasized that countries should amplify the economic impacts of foreign investment by promoting trade integration, improving institutional quality, fostering human capital development, and encouraging broader participation in the formal economy to maximize FDI benefits. 'Governments can also amplify the benefits by channeling FDI to sectors where the impact is greatest. FDI can also help increase job opportunities for women: the domestic affiliates of multinational enterprises, for example, tend to have a higher share of female employees than domestic firms,' the report stated. Saudi Arabia is also among the global frontrunners in efforts to bridge the gender gap in the workforce. Speaking during the Future Investment Initiative in Riyadh in October, Saudi Arabia's Minister of Finance, Mohammed Al-Jadaan, said the nation aims to achieve 40 percent female workforce participation by the end of the decade, having already surpassed its Vision 2030 target of 30 percent. He added that 45 percent of small and medium enterprises in the Kingdom are headed by women. Underscoring the importance of global cooperation, the World Bank urged all countries to work together to accelerate policy initiatives that can help direct FDI flows to developing economies with the largest investment gaps. 'Technical and financial assistance to support structural reform efforts in developing countries — especially low-income countries — are critical for facilitating FDI inflows,' the bank concluded.
Arab News
7 days ago
- Arab News
Hajj operations set ‘global benchmark' in crowd management: Sri Lanka envoy
COLOMBO: Saudi Arabia's organization of this year's Hajj has set a new standard in crowd management through the use of advanced technologies, Sri Lanka's envoy said on Sunday, as hundreds of thousands of pilgrims started to return home. In the 2025 Hajj season, almost 1.7 million people undertook the spiritual journey that is one of the tenets of Islam. More than 1.5 million arrived in the Kingdom from abroad, according to data from the General Authority for Statistics. Pilgrims started to arrive in May, ahead of the main rituals which this year fell on June 6-10. Many have already departed for their countries of origin but special post-Hajj flights will continue to operate until mid-July. The way the temporary influx of people has been handled by the Kingdom has 'set a global benchmark in crowd management and smart innovation,' said Ameer Ajwad, Sri Lanka's ambassador to the Kingdom, who this year was part of his country's Hajj contingent. Technology has played a key role in monitoring footage from more than 15,000 cameras installed in and around the holy city of Makkah. The monitoring systems were designed to detect unusual crowd movements and anticipate bottlenecks in foot traffic to help prevent stampedes. 'The Kingdom set an exemplary global benchmark for crowd management by using AI-based crowd monitoring, predictive analytics as well as preventing unauthorized entries,' Ajwad told Arab News. 'Innovations by using advanced technologies such smart tents, digital tools and AI systems were also introduced to facilitate this year's Hajj arrangements.' More than 420,000 workers from the public and private sectors, including security services, served pilgrims during this year's Hajj, GASTAT data shows. The envoy highlighted the 'tireless services rendered by the Saudi security and military officers, as well as guides and volunteers,' and extended gratitude to the Ministry of Health for 'providing world-class healthcare services to the Hajj pilgrims (from) around the globe, including heart surgery for a Sri Lankan pilgrim.' About 3,500 Sri Lankans took part in the pilgrimage this year. Muslims constitute about 10 percent of the 22 million population of the island nation, which is predominantly Buddhist.
Arab News
7 days ago
- Business
- Arab News
Saudi inflation holds steady at 2.2% in May
RIYADH: Saudi Arabia's annual consumer inflation edged up to 2.2 percent in May, with rental prices emerging as the principal driver behind the increase. The uptick was fueled by an 8.1 percent rise in housing rents, including a 7.1 percent increase in villa rental prices, according to the latest data released by the General Authority for Statistics. While inflation across the Middle East and Central Asia shows signs of easing, country-level dynamics remain mixed, with Egypt reporting 16.8 percent in May, Jordan at 1.98 percent, Saudi Arabia holding steady at 2.2 percent, and Dubai's rate moderating to 2.3 percent in April. In a release, GASTAT stated: 'On a monthly basis, the consumer price index remained stable in May 2025, recording a 0.1 percent increase compared to April 2025.' It added: 'This was mainly due to a 0.3 percent rise in housing, water, electricity, gas, and other fuels section, driven by a 0.4 percent increase in actual housing rent Prices.' On a month-to-month basis, the consumer price index recorded only a modest increase, signaling relative price stability. However, key segments such as housing, food and beverages, and personal goods and services contributed to the mild inflationary pressure, partially offset by declines in transportation and household furnishings. The Kingdom's inflation dynamics in May highlight the ongoing strain in the housing sector, where rising rental costs have been the most significant inflationary force. The housing, water, electricity, gas, and other fuels category saw a year-on-year increase of 6.8 percent, driven primarily by the sharp climb in actual rents. This sector carries the greatest weight in the consumer basket, representing 25.5 percent of the overall index, which significantly increases its impact on the national inflation rate. GASTAT stated that 'rents paid for housing in May 2025 increased by 8.1 percent, attributed to a 7.1 percent increase in rental prices for villas,' underscoring the persistent demand pressures in the residential rental market. As urban development and population growth continue, rental affordability may remain a critical issue for policymakers. The upward trend in rents is being driven by a complex mix of structural and economic factors. Residential demand in Saudi Arabia's largest cities, particularly Riyadh and Jeddah, has increased as urban populations grow and Vision 2030 development projects attract investment. Major initiatives such as NEOM and Jeddah Central are fueling this trend. At the same time, housing supply has not kept pace, especially in the rental market, despite a pipeline of 3.5 million residential units. Construction activity remains below the level needed to stabilize prices. Rising costs for building materials and labor have also pushed up developers' expenses, contributing to higher rents. These dynamics reflect the Kingdom's rapid urban development under Vision 2030, which aims for a 70 percent homeownership rate and a diversified economy. However, as mortgage-backed homeownership increases, rental demand remains strong, continuing to perpetuate upward pressure on rents. In addition to housing, food and beverage prices rose by 1.6 percent compared to May 2024, largely driven by a 2.8 percent increase in the prices of meat and poultry. These gains coincide with trends observed in the wholesale sector, where the prices of agricultural and fishery products jumped by 4.4 percent over the same period. Agricultural products alone posted a 6.2 percent rise, and fishing products increased by 6.1 percent, indicating upstream cost pressures that are gradually being passed on to consumers. The personal goods and services category also saw a notable annual rise of 4 percent, led by a 24.4 percent increase in prices of jewelry, watches, and precious antiques. This increase, while potentially reflecting stronger discretionary spending, also suggests elevated pricing in the luxury goods segment. Meanwhile, catering services drove a 1.8 percent increase in restaurant and hotel prices, adding modestly to overall inflation. Education and health costs recorded limited inflation, with education rising by 1.3 percent, primarily due to a 5.6 percent increase in non-university post-secondary costs. Health-related prices remained broadly stable, providing some relief in an otherwise inflationary environment. However, certain sectors experienced deflationary pressures. Furnishings and household equipment prices dropped by 2.5 percent year on year, largely because of a 4 percent decline in furniture, carpets, and flooring prices. Clothing and footwear prices fell by 0.9 percent, driven by a 2.7 percent reduction in footwear prices. Transport costs also decreased by 0.8 percent, as the price of vehicle purchases dropped by 1.9 percent. These categories helped counterbalance some of the broader upward pressures on the index. On a monthly basis, the CPI's 0.1 percent increase was relatively muted. Food and beverage costs rose by 0.1 percent, while personal goods and services increased by 0.5 percent, and tobacco prices ticked up 0.2 percent. However, several categories saw declines: transportation fell 0.2 percent, recreation and culture decreased 0.1 percent, furnishings dropped 0.7 percent, clothing and footwear slipped 0.4 percent, and communication declined 0.1 percent. The prices of education, health, and restaurants and hotels showed no significant month-over-month changes. Wholesale Price Index The broader inflation picture is reinforced by wholesale price data, which showed a 2 percent year-on-year increase in the wholesale price index in May. The WPI tracks the prices of goods before they reach the retail level, offering insights into future consumer price trends. The rise was mainly driven by the same categories that affected the CPI: agriculture and fishery products, which increased by 4.4 percent, and other transportable goods, excluding metals and machinery, which rose by 4.3 percent. 'This increase was primarily driven by an 8.2 percent rise in the prices of refined petroleum products,' the WPI report stated. Furniture and other transportable goods not elsewhere classified recorded a sharp 9 percent increase, further signaling inflationary pressures in non-essential consumer goods. Conversely, wholesale prices of metal products, machinery, and equipment fell by 0.3 percent, affected by a 5.1 percent decline in the prices of radio, television, and communication equipment, as well as a 3.3 percent decrease in general-purpose machinery prices. The prices of ores and minerals dropped by 1.5 percent, reflecting a general cooling in commodity prices, mainly due to a reduction in the prices of stone and sand. Monthly changes in the WPI were largely flat, recording no overall change from April. A slight 0.1 percent rise in the prices of transportable goods and ores was balanced out by a 0.3 percent decline in agricultural products and a 0.2 percent fall in metal and digital machinery prices.
Zawya
10-06-2025
- Business
- Zawya
GASTAT: Saudi Industrial Production Index rises by 3.1% in April 2025
RIYADH — Saudi Arabia's Industrial Production Index (IPI) recorded an increase of 3.1 percent during the month of April 2025 compared to the same month in 2024. According to the results of the IPI for the month of April 2025, released on Tuesday by the General Authority for Statistics (GASTAT), the mining and quarrying sub-index rose by 0.2 percent year-on-year, while the manufacturing sub-index recorded a 7.4 percent increase. The GASTAT bulletin also reported a 0.2 percent decrease in the sub-index for electricity, gas, steam, and air conditioning supply activities, whereas the sub-index for water supply, sewage, waste management, and treatment activities increased by 8.8 percent compared to April of the previous year. Based on key economic activities, the bulletin further revealed a 4.3 percent year-on-year increase in the index for oil-related activities in April 2025, and a 0.1 percent rise in the index for non-oil activities. GASTAT issues IPI every month to measure relative changes in industrial production volumes. The index is based on data from the Industrial Production Survey, which is conducted on a sample of establishments operating in targeted industrial sectors, including mining and quarrying; manufacturing, electricity, gas, steam, and air conditioning supply; and water supply, sewage, waste management, and treatment activities. © Copyright 2022 The Saudi Gazette. All Rights Reserved. Provided by SyndiGate Media Inc. (
