Jadwa Investment lowers Saudi inflation forecast to 1.7% amid strong non-oil growth

Saudi Arabia’s fiscal strategy remains focused on balancing its budget while continuing to invest in key areas of the economy. Shutterstock
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Updated 28 August 2024
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Jadwa Investment lowers Saudi inflation forecast to 1.7% amid strong non-oil growth

  • Revision attributed to stable consumer price growth, with inflation increasing by only 1.6% in the first half of 2024
  • Jadwa said lower prices in clothing, footwear and transportation have mitigated inflationary pressures from housing market

RIYADH: Saudi Arabia’s inflation is projected to drop to 1.7 percent in 2024, revised down from 2 percent, driven by robust non-oil sector growth and lower prices in key sectors, according to Jadwa Investment. 

The Riyadh-based investment management and advisory company attributed this revision to stable consumer price growth, with inflation increasing by only 1.6 percent in the first half of the year. 

Jadwa said that lower prices in clothing, footwear, and transportation have mitigated inflationary pressures from the housing market. This trend aligns with global patterns, where easing demand and improved supply chains are reducing price pressures. 

Despite the overall moderation in inflation, housing costs remain a significant driver, particularly in the ‘rentals for housing’ segment. Prices in this category have stayed high due to elevated demand and a tight rental market, exacerbated by high interest rates prompting more Saudis to rent rather than buy homes. 

The report said that this trend is expected to persist, maintaining pressure on prices within the housing and utilities segment, which constitutes 25 percent of the Consumer Price Index. 

The sector’s performance is influenced by the government’s Vision 2030 initiatives aimed at increasing housing availability and improving quality of life. 

Jadwa also anticipates a gradual rebound in food and beverage prices in the latter half of the year. The Food and Agriculture Organization’s food price index showed a 2.5 percent increase in the first half of 2024, suggesting potential upward pressure on local prices. 

Rising shipping costs may also contribute marginally to future price increases. Nevertheless, overall inflation is expected to remain lower than initially forecasted, reflecting effective economic policy management. 

In a broader economic context, Jadwa Investment observed robust growth in Saudi Arabia’s non-oil sectors, a key component of the Kingdom’s Vision 2030 diversification strategy. 

The firm projects real non-oil gross domestic product to grow by 4.5 percent in 2024, slightly above the 4.4 percent growth recorded last year. This growth is driven by strong performances in domestic trade, transport, and construction, supported by significant public and private investment. 

The second half of 2024, particularly the fourth quarter, is expected to see accelerated economic activity as Saudi Arabia continues efforts to reduce reliance on oil revenues. 

These sectors are crucial to Vision 2030’s goal of creating a diversified and resilient economy through enhanced infrastructure and innovation. 

The oil sector, however, presents a more challenging outlook. The Kingdom’s crude oil production is expected to average around 9 million barrels per day in 2024, following OPEC+’s decision to extend production cuts in June. 

As a result, the hydrocarbons GDP is projected to contract by 6 percent, contributing to a modest overall economic growth of 1.5 percent for the year. 

This contraction highlights the ongoing challenges faced by the oil sector, which has been under pressure due to global market conditions and production constraints. 

The oil market’s volatility remains a key concern, especially given the global economic uncertainties that have led to fluctuations in demand. 

Adding to this complex landscape, OPEC’s recent projections suggest global oil demand will grow by 2.1 million barrels per day in 2024, slightly down from the previous estimate of 2.2 million bpd. 

The organization expects demand growth to slow further in 2025 to 1.8 million bpd, reflecting weaker global economic activity. 

Meanwhile, non-OPEC+ supply is forecasted to increase by 1.2 million bpd in 2024, which is less than the expected demand, providing some justification for the partial unwinding of OPEC+ production cuts as outlined in their June agreement. 

These dynamics are critical as they influence Saudi Arabia’s oil production strategy, which is carefully calibrated to maintain market stability while ensuring the Kingdom’s economic resilience. 

On the fiscal front, Jadwa maintains a stable outlook, projecting that the budget deficit will remain at 2 percent of GDP in 2024, consistent with the previous year. 

This projection is supported by higher non-oil revenues, driven by strong domestic demand and increased government spending. 

The report also highlights the role of increased dividends from oil giant Aramco in maintaining hydrocarbon revenue levels, despite lower oil production volumes. 

These dividends, particularly the performance-related payouts, have been crucial in stabilizing the Kingdom’s fiscal position. 

Saudi Arabia’s fiscal strategy remains focused on balancing its budget while continuing to invest in key areas of the economy, aligning with Vision 2030’s goals of sustainable growth and diversification. 

Looking ahead, the report forecasts Brent crude prices to average $84 per barrel in 2024, consistent with the average over the past 18 months. 

However, for 2025, prices are expected to decrease slightly to $82 per barrel, influenced by a combination of challenges to global GDP growth and anticipated increases in OPEC+ supply. 

Despite these challenges, OPEC+ is expected to maintain a flexible approach to ensuring global oil market stability, with Saudi production anticipated to rise to 9.5 million bpd in 2025. 

This outlook, however, carries risks, including potential slowdowns in major economies like the US and China, which could impact demand, and geopolitical tensions that could lead to oil price volatility. 

While Saudi Arabia faces challenges in the oil sector, the resilience and growth of its non-oil economy underscore the success of the Vision 2030 initiatives. 

These efforts continue to drive economic diversification, ensuring that the Kingdom remains on a stable growth trajectory despite global economic uncertainties. 

As the Kingdom navigates these complex dynamics, its focus on innovation, infrastructure, and strategic investments will be key to sustaining long-term growth. 


OPEC+ moves to set 2027 production baselines

Updated 28 May 2025
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OPEC+ moves to set 2027 production baselines

RIYADH: OPEC+ announced on Wednesday that it will establish a framework to determine new oil production baselines for 2027, marking a significant step in its long-term planning, said an official statement.

The alliance — comprising the Organization of the Petroleum Exporting Countries and partners including Russia—has been negotiating revised production baselines for several years. These baselines serve as reference points from which member states adjust their output levels.

According to the statement issued following the group’s meeting, said it had tasked the OPEC Secretariat with developing a mechanism to assess each country’s maximum production capacity. These assessments will form the basis for 2027 production targets across all member nations.

Since 2022, the group has implemented three tiers of output cuts. Two remain in place through the end of 2026, while the third is being gradually phased out by eight participating countries. No changes were made to the group’s current production policy at Wednesday’s session.

Due to the sensitive nature of the discussions, all sources spoke on condition of anonymity.

The 2027 baselines, once finalized, are expected to guide production policy after the current round of cuts expires.

Oil prices, which dipped below $60 per barrel in April—the lowest level in four years—following OPEC+’s decision to accelerate May output and amid trade tensions triggered by US tariffs, have since rebounded to around $65.


Saudi Arabia launches advanced manufacturing center to boost industrial innovation

Updated 28 May 2025
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Saudi Arabia launches advanced manufacturing center to boost industrial innovation

JEDDAH: Saudi Arabia has launched the Advanced Manufacturing and Production Center, a key initiative aimed at accelerating the Kingdom’s industrial transformation through the adoption of advanced technologies and sustainable practices.

Unveiled on May 28, the center is set to play a central role in promoting efficiency, flexibility, and growth within the manufacturing sector. It will utilize technologies associated with the Fourth Industrial Revolution to localize production and enhance Saudi Arabia’s competitiveness on the global stage.

The initiative also supports strategic industries while aligning with the objectives of Saudi Vision 2030, the country’s long-term plan to diversify its economy. A major focus is encouraging private sector collaboration to speed up the integration of emerging technologies into industrial operations.

The launch supports the National Industrial Strategy, introduced in October 2022, which aims to increase the number of factories in the Kingdom to approximately 36,000 by 2035. The strategy is designed to attract investment, scale up local production, and strengthen non-oil exports.

The Ministry of Industry and Mineral Resources is overseeing several projects to advance the Kingdom’s industrial and logistical infrastructure, positioning Saudi Arabia as a key player in global manufacturing and trade.

“Adopting the latest industrial technologies raises the efficiency of our industrial sector and enhances its competitiveness regionally and globally,” said Khalil bin Ibrahim bin Salamah, deputy minister of industry and mineral resources for industrial affairs, in a post shared by the ministry on X.

In an accompanying video, the ministry reiterated the center’s significance in meeting national goals: “The Advanced Manufacturing and Production Center opens doors to industrial investment opportunities and stimulates the sector to adopt new manufacturing technologies within industrial facilities.”

The center is supported by several initiatives and programs, including the Future Factories Program, which aims to modernize 4,000 factories across the Kingdom. The FFP focuses on integrating advanced manufacturing systems to boost efficiency and build more resilient supply chains—particularly in critical sectors such as food and petrochemicals.

According to its official website, the center serves as a hub for industrial innovation, providing consultancy services, training, and technological solutions. It is dedicated to fostering sustainability and competitiveness across the manufacturing sector.

Through these efforts, the center is expected to significantly contribute to Saudi Arabia’s Vision 2030 goals by localizing high-tech capabilities, attracting investment, and advancing the industrial sector’s role in the nation’s economic diversification.


Closing Bell: Saudi main index rises to close at 11,052

Updated 28 May 2025
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Closing Bell: Saudi main index rises to close at 11,052

RIYADH: Saudi Arabia’s Tadawul All Share Index advanced on Wednesday, closing higher by 127.58 points, or 1.17 percent, to reach 11,052.76, reflecting broad market optimism.

Trading activity remained robust, with a total turnover of SR4.57 billion ($1.21 billion). Of the listed stocks, 202 posted gains while 44 declined.

The Kingdom’s parallel market, Nomu, also recorded gains, rising 340.91 points, or 1.28 percent, to close at 26,932.95. The market saw 48 advancing stocks against 34 decliners.

Meanwhile, the MSCI Tadawul 30 Index climbed 15.12 points, or 1.08 percent, ending the session at 1,413.70.

Fawaz Abdulaziz Alhokair Co. emerged as the session’s top performer, with its share price jumping 5.77 percent to SR16.50.

Ataa Educational Co. and Kingdom Holding Co. followed closely, gaining 5.46 percent and 5.22 percent to close at SR61.80 and SR8.66, respectively.

On the downside, United Carton Industries Co. registered the steepest decline, falling 4.87 percent to SR46.85. Banan Real Estate Co. dropped 2.4 percent to SR4.48, while Nama Chemicals Co. slipped 1.78 percent to SR27.55.

On the announcements front, Saudi AZM for Communication and Information Technology Co. disclosed it has submitted a request to transfer its listing to the main market.

Additionally, the initial public offering for Flynas Co. began on May 28 and will conclude on June 1. The offering is priced at SR80 per share, with a retail tranche comprising 10.25 million shares. According to a statement, BSF Capital is the lead manager.

Alkathiri Holding Co. announced that its subsidiary has signed a 50-year lease agreement valued at SR143 million with the Asir Region Municipality to develop a commercial and hospitality project in the city of Abha.

According to a statement published on the Saudi stock exchange, the project will feature a four-star hotel with a capacity of 180 keys, alongside retail and entertainment facilities. The development aims to boost tourism and enhance commercial services in the Asir region.

The lease will officially begin upon the land handover by the Investment Committee of the Asir Region Municipality.

Shares of Alkathiri Holding closed Wednesday’s trading session at SR2.06, marking a 1.96 percent gain.

In a separate disclosure, Mufeed Co. announced that its board of directors has recommended to the ordinary general assembly the transfer of its statutory reserve balance — totaling SR3.49 million, as reported in the financial statements for the year ended Dec. 31, 2024 —to retained earnings.


Saudi Arabia’s Asir region revitalizes 95% of stalled projects

Updated 28 May 2025
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Saudi Arabia’s Asir region revitalizes 95% of stalled projects

  • Asir is a vast region in the Kingdom with a population exceeding 2 million people
  • Interest from global players seeking early opportunities in the region’s evolving landscape has grown

ABHA: Saudi Arabia’s Asir region has successfully revitalized 95 percent of its previously delayed project, an important milestone that is strengthening investor confidence as the region moves forward with SR29 billion ($7.73 billion) worth of initiatives across various sectors.

In an interview with Arab News, Hashim Al-Dabbagh, CEO of Asir Region Development Authority, stated that a dedicated committee, chaired by Asir Gov. Prince Turki bin Talal, was formed several years ago to tackle long-standing investment challenges that had stalled progress in the region.

“The total number of cases that have been brought to this committee to address has been 63, all brought to the table,” Al-Dabbagh said.

He continued: “Of these 63 cases that have been brought to this committee to address and to solve, 60 cases have been solved, and three are in the pipeline right now, and they’re working on them, and they’re going to solve them relatively soon.”

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Of the 60 resolved, 57 were concluded with outcomes that satisfied investors, reflecting a resolution rate of nearly 95 percent.

“This committee and the work that they have done has created some very positive vibes across the investment ecosystem in Saudi Arabia, which you sense in this forum because there are some very large investors that are coming to Asir, some coming back to Asir which had not been interested in this region in the past,” Al-Dabbagh said.

The board operates in collaboration with various public and private entities, including ASDA, the Ministry of Investment, the Ministry of Tourism, the Tourism Development Fund, and King Khalid University, ensuring a unified approach to accelerating investor activity in the region.

This resolution mechanism plays a key role in supporting the region’s development strategy, which focuses on unlocking investment potential across various sectors.

“First of all, we have a strategy that drives everything that we are doing,” Al-Dabbagh said.

He added: “The strategy has been approved by the center of government, and it says that Asir should be a year-round preeminent destination, so already we know that we need to focus on the tourism sector and complementary and adjacent sectors to the tourism sector. That’s one, and that gives us a lot of momentum in working with the government ecosystem and the private sector.”

Al-Dabbagh emphasized that Asir is more than just a tourism destination, noting that it is a vast region in the Kingdom with a population exceeding 2 million people.

“Within the Asir Development Authority, we have a whole department called Economic Development Department, and they are working diligently this year on sectoral studies across the board.”

He added: “This includes, obviously, tourism-related sectors, but also other ones, so just as an example, we are looking at sports, we are looking at construction. We’re looking at fisheries and agriculture. We’re looking at renewable energy. We’re looking at mining among other sectors.”

The authority is also aligning its economic strategy with educational institutions to ensure the region’s workforce is equipped to meet the demands of upcoming sectors.

“We are working closely with King Khalid University, the TVTC (Technical and Vocational Training Corp.), Bishop University, and other educational institutions to align the strategies and to make sure that their graduates are able to find jobs in the opportunities that are going to be realized as we realize this strategy,” he said.

On attracting investments, Al-Dabbagh stated: “What I call the investment ecosystem in Asir, it’s the framework that we use to assess investments, is comprised of three components. The first component is the Invest in Asir committee, and that’s headed by Prince Turki in his capacity as the chairman of the Aseer Development Authority and includes all the public and private sectors.”

He explained that the region offers a compelling opportunity for early movers due to its untapped potential, strategic government backing, and the ability to enter key sectors before they reach full maturity, providing investors with a critical advantage in shaping long-term development.

“Asir relative to those mature, tourism destinations, offers relatively less mature areas, so when they’re coming in, they’re coming in early and they’re going to have a ... not a first mover advantage, but an early mover advantage compared to people that are going to see this place for five years or 10 years down the road when all these incumbents are already on the ground.”

Attracting FDIs

Foreign direct investment is also gaining momentum in Asir, with growing interest from global players seeking early opportunities in the region’s evolving landscape.

“One of the speakers in today’s forum was Fatih (who is managing partner of FTG Development), and they are looking at an investment worth billions in Asir. That is just one example, and foreign direct investors, they look for successful local investors to partner with,” Al-Dabbagh said.

He concluded: “Our doors are open. We’re very happy to meet with the investors from anywhere.”


EU lifts economic sanctions on Syria

Updated 28 May 2025
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EU lifts economic sanctions on Syria

BRUSSELS: The European Union lifted economic sanctions on Syria on Wednesday in an effort to support the country’s transition and recovery after the toppling of former president Bashar Assad.
The move follows a political agreement reached last week by EU foreign ministers to lift the sanctions.
The EU will keep sanctions related to Assad’s government and restrictions based on security grounds, while also introducing new sanctions against individuals and entities connected to a wave of violence in March, the Council said.
“The Council will continue monitoring developments on the ground and stands ready to introduce further restrictive measures against human rights violators and those fueling instability in Syria,” it added.