JEDDAH: A plunge in Saudi Arabia’s inflation rate, to its lowest level in more than 10 years, is good news for the Kingdom’s efforts to reduce a huge state budget deficit without stifling economic growth.
Annual consumer price inflation slowed to 1.7 percent in December from 2.3 percent in November, the Central Department of Statistics reported on Monday. On a month-on-month basis inflation was negative, with prices dropping 0.5 percent.
Much of the decline was due to lower food prices, which fell 4.3 percent from a year earlier. Saudi Arabia imports many basic foods; its costs were reduced by soft global food prices and the Saudi riyal’s peg to the US dollar, which has been strong globally.
Riyadh hiked domestic fuel and utility prices in December 2015 to cut a $98 billion budget deficit produced by low oil prices. That caused inflation to almost double in the following month to 4.3 percent, its highest level since 2012, squeezing the incomes of Saudi consumers and slowing the economy further.
“In the first half of last year, inflation caused a considerable erosion of household incomes and people’s ability to pay for things — the data shows this has eased,” said Jason Tuvey, Middle East analyst at London-based Capital Economics.
The data is also positive because it shows the economy has been flexible enough to absorb the fuel and utility price hikes of December 2015 without a self-sustaining spiral of higher inflation spreading into other sectors.
That is positive for the government because Riyadh plans another round of fuel and utility price rises around the middle of this year, after it has introduced a program to compensate poorer Saudis for the impact on their living standards.
The Kingdom plans to introduce a 5 percent value-added tax (VAT) next year to shrink its deficit further. While inflation could fall a little further early this year, it is likely to bounce back above 4.0 percent in response to VAT, Tuvey said.
Saudi inflation plunge aids government in fight to tame deficit
Saudi inflation plunge aids government in fight to tame deficit
Acwa signs key terms to develop 5GW of renewable energy capacity in Turkiye
JEDDAH: Saudi utility giant Acwa has signed key investment agreements with Turkiye’s Ministry of Energy and Natural Resources to develop up to 5 gigawatts of renewable energy capacity, starting with 2GW of solar power across two plants in Sivas and Taseli.
Under the investment agreement, Acwa will develop, finance, and construct, as well as commission and operate both facilities, according to a press release.
The program builds on the company’s first investment in Turkiye, the 927-megawatt Kirikkale Independent Power Plant, valued at $930 million, which offsets approximately 1.8 million tonnes of carbon dioxide annually, the statement added.
A separate power purchase agreement has been concluded with Elektrik Uretim Anonim Sirketi for the sale of electricity generated by each facility.
Turkiye aims to boost solar and wind capacity to 120GW by 2035, supported by around $80 billion in investment, while recent projects have already helped prevent 12.5 million tonnes of CO2 emissions and reduced reliance on imported natural gas.
Turkiye’s energy sector has undergone a rapid transformation in recent years, with renewable power emerging as a central pillar of its strategy.
Raad Al-Saady, vice chairman and managing director of ACWA, said: “The signing of the IA (implementation agreement) and PPA key terms marks a pivotal moment in Acwa’s partnership with Turkiye, reflecting the country’s strong potential as a clean energy leader and manufacturing powerhouse.”
He added: “Building on our long-standing presence, including the 927MW Kirikkale Power Plant commissioned in 2017, this step elevates our partnership to a new level,” Al-Saady said.
In its statement, Acwa said the 5GW renewable energy program will deliver electricity at fixed prices, enhancing predictability for grid planning and supporting long-term industrial investment.
By replacing imported fossil fuels with domestically generated clean energy, the initiative is expected to reduce Turkiye’s exposure to global energy market volatility, strengthening energy security and lowering long-term power costs.
The company added that the economic impact will extend beyond the anticipated investment of up to $5 billion in foreign direct investment, with thousands of jobs expected during the construction phase and hundreds of high-skilled roles created during operations.
The energy firm concluded that its existing progress in Turkiye reflects a strong appreciation for Turkish engineering, construction, and manufacturing capacity, adding that localization has been a strategic priority, and it has already achieved 100 percent local employment at its developments in the country.
