Saudi economy warms up as private spending rises

Time: May 09, 2019  

The Saudi economy is now showing renewed signs of life, according to Bloomberg Economics’ activity heat map. (Reuters)
  • Bloomberg Economics expects non-oil growth to average 2.6 percent this year, helped by fiscal stimulus
  • The steep decline in oil prices since 2014 has led to budgetary deficits across oil exporting Gulf economies as they seek to reduce their reliance on hydrocarbons

LONDON: Rising private sector consumption and government fiscal stimulus measures are expected to give a boost to the Saudi economy, according to new research from Bloomberg Economics.
It expects non-oil growth to average 2.6 percent this year, up from 2.1 percent in 2018, helped by fiscal stimulus, a lower drag from monetary policy and more spending by the public.
But it is not year clear if the pickup will help to reduce the budgetary deficit.
“In theory, higher growth should reduce the budget deficit,” Ziad Daoud, chief Middle East economist at Bloomberg Economics told Arab News. “But cause-and-effect flows in the opposite direction in this case: The recent uptick in growth was largely driven by higher government spending.”
The steep decline in oil prices since 2014 has led to budgetary deficits across oil exporting Gulf economies as they seek to reduce their reliance on hydrocarbons, roll back state subsidies and seek to boost growth in non-oil industries and services.
A government crackdown on corruption in the Kingdom saw some funds leave the country that may have otherwise been invested domestically.
At the same time the introduction of valued added tax (VAT), costlier fuel prices and rising expatriate levies caused growth in the non-oil economy to slow to 1.6 percent in the first quarter of 2018 compared to 2.3 percent in the third quarter of 2017.
But the Saudi economy is now showing renewed signs of life, according to Bloomberg Economics’ activity heat map. A number of indicators are picking up, showing non-oil growth has returned to levels seen before the corruption purge, it said.
However, while the economy might be showing signs of recovery, it’s still a long way short of the growth rates achieved during the oil-boom of 2004-13, which averaged 7.7 percent a year.
Growth remains mainly driven by an oil financed fiscal stimulus package rather than the private sector, Bloomberg Economics said.

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King Abdullah Port ranked world’s 2nd-fastest-growing in 2018

Time: April 29, 2019  

The Saudi port is amongst the fastest growing in the world. (File/SPA)
  • The port was ranked eight in 2017

JEDDAH: Alphaliner has ranked King Abdullah Port at King Abdullah Economic City (KAEC) second among the world’s fastest-growing ports in 2018.
The port was ranked eighth in 2017. Its CEO Rayan Qutub said this indicates that it is on the right track.
Alphaliner specializes in analyzing maritime data, port capabilities, the future development of ships and shipping routes worldwide.

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Saudi GDP could surprise on the upside, higher budget deficit seen in 2019: IMF

29/04/19

DUBAI (Reuters) – The International Monetary Fund (IMF) estimates that Saudi Arabia’s economic growth in 2019 may be slightly higher than its earlier 1.8 percent forecast as the non-oil sector is expanding faster than the wider economy, a senior official said.

 

FILE PHOTO: A view shows the construction of the King Abdullah Financial District, north of Riyadh, Saudi Arabia April 11, 2016. REUTERS/Faisal Al Nasser

The budget deficit this year could be 7.9 percent, higher than 2018 on an assumption that oil prices would be lower in 2019 compared to last year, Jihad Azour, director of the Middle East and Central Asia Department at the IMF, told Reuters.

“We expect non-oil growth to be at 2.6 percent this year and 2.9 percent for 2020,” he said in an interview in Dubai.

“Based on the early assessment of the (IMF) team, we think there are upside risks, i.e. growth could be slightly higher than the one we have in our projections,” Azour said.

Saudi central bank governor Ahmed al-Kholifey told Reuters last week that Saudi economic growth in 2019 would be “no less than 2 percent”.

The Saudi economy grew by 2.2 percent last year, recovering from a contraction in 2017.

Azour said an IMF team was now on the ground in Saudi Arabia and revised economic numbers were expected next week.

The IMF’s projection for the Saudi budget deficit in 2019 is based on the assumption that oil prices will remain in the mid-$60 per barrel range this year, he said.

Brent crude futures settled at $72.15 a barrel, down $2.20, on Friday after U.S. President Donald Trump again pressured the Organization of the Petroleum Exporting Countries to raise crude production to ease gasoline prices.

Saudi Arabia had estimated a budget deficit of 4.6 percent of gross domestic product in 2018 and its budget for 2019 forecast a deficit of 4.2 percent of GDP.

Saudi Finance Minister Mohammed al-Jadaan said last week the kingdom recorded a budget surplus of 27.8 billion riyals ($7.4 billion) in the January-March period, its first since oil prices plunged in 2014.

“The decline in oil price and the volatility we saw in the market are leading to an expected deficit of 7.9 percent,” Azour said. “We expect the situation to improve in 2020 to 5.7 percent.”

This article was first published in  Reuters

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Saudi Arabia sees first budget surplus since 2014

Time: April 25, 2019  

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Saudi Minister of Finance Mohammed al-Jadaan speaks during financial sector conference in Riyadh on April 24, 2019. (Reuters)
  • Saudi Arabia plans to increase state spending in 2019
  • The country will work on stabilizing the global oil market

DUBAI: Saudi Arabia achieved its first budget surplus since 2014, at about $7.41 billion in the first quarter, the country’s minister of finance said on Wednesday.

The surplus was on the back of a jump in oil and non-oil revenues, after Saudi Arabia’s finances were hit hard by a slump in oil prices almost five years ago.

Foreign direct investment in Saudi Arabia increased by 28 percent in the first quarter, Finance Minister Mohammed Al-Jadaan said.

The country is also launching a $3.33 billion initiative to support the growth of the private sector, including SMEs, he said.

“We are committed to the reform, this is not about the oil, this is about an economy that needs to be diversified,” Al-Jadaan said.

“If we have higher oil prices, I’ll be happier. I will have stronger reserves and that will provide a buffer for the down cycle,” he added.

Saudi Arabia plans to increase state spending by 7 percent this year, in an effort to spur economic growth that has been hurt by low oil prices, according to its 2019 state budget.

Average non-oil GDP grew at a faster 2.1 percent last year, compared with 1.3 percent in 2017, Al-Jadaan said.

The minister’s remarks come during the first day of Financial Sector Conference in Riyadh, organized by the Ministry of Finance and Saudi Arabian Monetary Authority (SAMA).

Saudi Arabia does not see a need for any immediate action as global oil inventories continue to rise, Saudi Energy Minister Khalid Al-Falih told the conference.

“We will not leave our customers scrambling to find the oil they need, we will make sure the oil market remains balanced at global level,” the minister said.

In other news from the Saudi capital, the stock exchange Tadawul announced the listing of Al-Moammar Information Systems Company, the first IT-related entity in the bourse’s roster of 201 listed companies.

The company held a five-day public offering last March and opened for subscription 4.8 million ordinary shares, at an offer price of 45 Saudi riyals per share, representing 30 percent of its paid-up capital.

Saudi Arabia’s Council of Ministers also issued a new banking license to Swiss lender Credit Suisse.

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Youth pillars of reform plan, future of Saudi Arabia

Time: April 24, 2019  

The Kingdom has responded positively to many of the resolutions recommended during the meeting. (SPA)
  • A survey last year showed that 92 percent of young Saudis interviewed expressed a positive view of the outcome of Crown Prince Mohammed bin Salman’s Vision 2030

RIYADH: Young people in Saudi Arabia are the pillars of the country’s reform plan and the future of the Kingdom, the Saudi Press Agency (SPA) reported Prince Abdul Aziz bin Turki Al-Faisal as saying.
The prince said that 70 percent of the country’s population were aged between 15 and 35, and that young people and sports were two key elements of the Vision 2030 reform plan.
“We rely heavily on the programs offered by the state in various fields of sports, the arts and entertainment for young men and women, and I hope that we always offer the best to Saudi Arabia, the Arab world and the Islamic world.”
The prince was in Cairo, attending a meeting of the Council of Arab Ministers of Youth and Sports. He said in a press statement that the Kingdom put forward many proposals throughout the year and that ministries responded positively to youth activities.
“The Kingdom has responded positively to many of the resolutions recommended during the meeting,” he said, adding that he hoped Arab youths would benefit from the outcome of these recommendations and meetings.
SPA reported last week that young Saudis were being trained to deal with the international media as part of a project to promote the Kingdom around the world.
A survey last year showed that 92 percent of young Saudis interviewed expressed a positive view of the outcome of Crown Prince Mohammed bin Salman’s Vision 2030.

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Saudi Arabia plans to create 561,000 jobs under new digital employment initiative

Time: April 24, 2019  

From left to right, Minister of Energy, Industry and Mineral Resources Khalid Al-Falih, Minister of Commerce and Investment Dr. Majid Al-Qassabi, and Minister of Telecommunication and IT Abdullah bin Amer Al-Sawaha, during the launch of the Qiwa platform. (Social media image)
  • Qiwa program aims to achieve the Vision 2030 goal of reducing unemployment rate to 7 percent

RIYADH: Saudi Arabia has revealed ambitious plans to create more than 561,000 private-sector jobs by 2023 as part of a new digital era for the Kingdom’s labor market.

Minister of Labor and Social Development Ahmad Al-Rajhi made the announcement at the launch of the Qiwa online platform, which aims to combine all the country’s employment services under one electronic roof.

Through digitalization, the Ministry of Labor and Social Development hopes to not only boost job opportunities for Saudi men and women, but also improve workplace efficiency and productivity, and attract international investment.

Al-Rajhi said: “The ministry has entered into partnerships and agreements to settle more than 561,000 job opportunities in the private sector until 2023,” and the minister added that 45,000 Saudis had entered the labor market in the last three months.

The new labor force platform will consolidate employment-related e-services already offered to job seekers, employees and employers and plans are in the pipeline to plug a further 71 services into the system.

The Qiwa program aims to provide Saudi government officials with a data mine of statistical information to tackle business challenges facing employers and employees, help create new job opportunities, and achieve the Vision 2030 goal of reducing the country’s unemployment rate to 7 percent. Another key objective is to strategically enhance the Kingdom’s business environment to make it more attractive to local and international investors.

A ministry statement issued to Arab News, said: “The Qiwa platform will have an impact on motivating investors. It will also re-engineer policies and procedures for all services provided to individuals and enterprises on a strong platform that will make a quantum leap in the business world and turn the Saudi market into an attractive market for opportunities and potential for competencies.

“The services are provided in both Arabic and English in order to enable foreign investors to benefit from the services of a strong platform,” the statement added.

The e-services include programs to encourage Saudis to access jobs in their locality by improving the workplace environment and making it more appealing to men and women.

The Kingdom’s public sector is quickly adapting to international standards and labor market demands by digitalizing services, while the ministry is using the latest business management methods to help public organizations increase the competency and productivity of workers while creating a competitive labor market that can partner with the private sector.

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Saudi consumer prices fall for third straight month in March

Time: April 23, 2019   

DUBAI, April 23 (Reuters) – Saudi Arabia’s annual consumer price index fell for the third month in a row in March as prices of housing, water and energy declined sharply.

The CPI index for March fell 2.1 percent from a year earlier and 0.1 percent from February, data from the General Authority for Statistics showed on Tuesday.

The housing, water, electricity and fuel component of the index dropped 8.1 percent from a year earlier, while clothing and footwear slid 1.5 percent.

“We believe deflation will persist in Saudi in 2019 but should normalise in the medium-term,” said Maya Senussi, Senior Middle East Economist at Oxford Economics.

“Currently the bulk of the drag comes from the weakness in the housing and utilities category, a story that is not unique to Saudi Arabia.”

January’s fall in annual CPI was the first since 2017. It partly reflected the fading impact of last year’s introduction of a value-added tax (VAT).

The United Arab Emirates, which also started charging VAT at the start of 2018, saw a 2.39 percent drop in its annual consumer price index in January.

Property rental prices are falling in the UAE and Saudi Arabia, the region’s biggest economy, as a result of UAE real estate oversupply and job losses in Saudi.

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Saudi Arabia’s youth unemployment numbers fall sharply

Time: April 16, 2019   

Saudi Arabia's youth unemployment numbers fall sharply
Total youth unemployment (20-24 years old) declined notably, from 42.7 percent in 2017 to 36.6 percent in 2018, according to latest figures.
By Sam Bridge

Unemployment in Saudi Arabia fell slightly in the fourth quarter of 2018 to 12.7 percent, according to latest figures.

Jadwa Investment, citing data from the General Authority for Statistics (GaStat) said unemployment had fallen from 12.8 percent in the same period in 2017.

Total youth unemployment (20-24 years old) declined notably, from 42.7 percent in 2017 to 36.6 percent in 2018, it noted.

Jadwa also said that female labour force participation continued to rise, reaching 20.2 percent by the end of 2018, up from 19.4 percent in 2017.

The data also showed that the total number of foreigners in the Saudi labour market declined by around 1.6 million since the start of 2017, with around one million leaving the market during 2018.

Looking at sectorial employment, the data showed that all sectors saw a drop in the number of foreign workers. The largest declines were seen in construction which saw 910,000 foreign and 41,000 Saudi departures, Jadwa said.

At the same time, five sectors saw an increase in the number of Saudi workers during 2018 compared to 2017, it added.

In 2018, the Ministry of Labour, in collaboration with the Human Resource Development Fund, laid out three stages of Saudization relating specifically to the retail sector.

These, added to a number of new initiatives during 2019, are likely to have had a positive impact on the labour market, Jadwa noted.

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Saudi Arabia on right economic road — even according to ‘Dr. Doom’ Nouriel Roubini

Time: April 12, 2019  

Nouriel Roubini urged the Kingdom to press on with its Vision 2030 plan. (AN Photo)
  • Nouriel Roubini: It’s a long term plan, but if it’s implemented right and consistently it could be successful and Saudi Arabia could become a prosperous country
  • Roubini: I think that both President Trump and President Xi need a trade deal, so they’ll reach an agreement

BAHRAIN: Economist Nouriel Roubini famously predicted the global financial crisis of 2008, earning himself the nickname “Dr. Doom” in the process.

But even he is not gloomy about the potential of Saudi Arabia’s reform plans — which he believes will make the country thrive if continued in the right way.

Speaking to Arab News at the Top CEO conference in Bahrain, Roubini urged the Kingdom to press on with its Vision 2030 plan, which aims to wean the country off its addiction to oil.

“It’s a long term plan, but if it’s implemented right and consistently it could be successful and Saudi Arabia could become a prosperous country,” he said.

“Economically there is an ambitious program of modernization because the young leader-to-be has realized that, with a youth bulge and a high unemployment rate you have to modernize and open up the economy, give jobs and opportunity to people.”

Roubini, who teaches at New York University’s Stern School of Business, said he did not believe a global financial crisis is imminent.

“I do not see another global financial crisis in the next year or so, but eventually there will be a global recession. If and when that occurs is a very open question, but it’s not over the near horizon.”

Roubini, who told the audience that today he would rather be known as “Dr. Realist” than “Dr. Doom,” said he was more optimistic on global trade, although he expressed some cynicism over US President Donald Trump.

“I think that both President Trump and President Xi need a trade deal, so they’ll reach an agreement. Trump will declare victory whatever deal they reach.”

Meanwhile the conference was also told that the Arab region, like the rest of the world, needed to embrace change or face failure.

And that change, delegates were told, must include an increase in the representation of women in the workplace at a senior level.

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Saudi Arabia’s energy minister Khalid Al-Falih talks Middle East industrialization at WEF MENA event

Time: April 07, 2019  

Saudi Arabia’s energy minister Khalid Al-Falih spoke at the World Economic Forum for Middle East and North Africa about the Kingdom’s new vision for industrialization in the Middle East region. (Screenshot)

DEAD SEA, Jordan: Saudi Arabia’s energy minister Khalid Al-Falih spoke at the World Economic Forum for Middle East and North Africa about the Kingdom’s new vision for industrialization in the Middle East region.

The discussion with WEF founder Klaus Schwab opened with the Swiss thanking Al-Falih for the large Saudi delegation at the forum, and Al-Falih voiced his appreciation for Schwab’s support for the Middle East region at the various WEF events.

Al-Falih thaned Schwab for WEF’s ongoing support for the Middle East region at various, previous events and he echoed Crown Prince Mohammed bin Salman’s assertion that the region “can become the new Europe.”

The energy minister used the cases of Saudi Aramco and SABIC as examples of how Saudi Arabia can lead the way in advancing industrialization in the region and he mentioned how important tapping into the youth talent pool for development.

On the role of the private sector in the success of Saudi Arabia’s Vision 2030 plans and economic diversification, Al-Falih said the Kingdom’s government was making sure the private sector was encouraged to operate and invest in the Kingdom, citing examples of airports and ports, and facilities privatization in Saudi Arabia.

When asked by Schwab about the transition from fossil fuels to newer, renewable energy sources and its impact on Saudi Arabia’s economy, Al-Falih said the process would take many decades, and that with population growth adding 2 billion people to the global population and the subsequent expansion of the ‘middle class,’ demand for all sources of energy — including oil and gas — will still exist well into the middle of the century.

Al-Falih highlighted Saudi Arabia’s “heavy investment” in renewable energies, and how he advises the Saudi government as well as his clients that the use of oil and gas has to be “more effective”, adding that both would peak by the middle of the century and saying “we will still need all solutions.”

The energy minister was also positive about the future for the Kingdom in terms of youth employment and women empowerment in the workplace — stating the need for the private sector to be involved in the education of youth, of both genders, given they it benefits them when hiring graduates. It is something the education ministry in Saudi Arabia is concentrating on by revamping the curriculum to help graduates get into the private sector, Al-Falih said.

And Al-Falih said that, while Saudi Arabia’s plan for women empowerment in the work force will come about differently to the way it works in other parts of the world, he was certain women in the Kingdom and the Middle East region as a whole will thrive.

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