DUBAI: Saudi Arabia is to inject SR72 billion ($19.2 billion) into the private sector of the economy in a bid to stimulate activity in the non-oil sector, which has been hit by the slowdown in government spending as a result of oil revenue weakness.
Housing and small business are major beneficiaries of the stimulus package. Among the measures announced in a decree by King Salman are a SR21.2 billion initiative on subsidized loans to provide housing, a SR13.8 billion injection into new building technologies, and a proposal valued at SR10 billion to support the funding of big infrastructure initiatives.
Other big items include a SR1.5 billion initiative to support companies in financial distress, and a SR7 billion plan to refund government fees to small and medium enterprises (SMEs).
A statement from the Center for International Communication (CIC) in Riyadh said the decree was based on recommendations from Crown Prince Mohammed bin Salman, who is also deputy prime minister and president of the powerful Council for Economic and Development Affairs.
The growth of the non-oil economy is a crucial part of the Vision 2030 strategy which seeks to reduce the Kingdom’s dependency on oil revenue and government spending. The private sector of the Saudi economy is still largely dependent on spending by government agencies for its economic activity. The government is planning some $200 billion worth of state sell-offs in one of the biggest privatization plans in history, in addition to the planned $100 billion initial public offering (IPO) of shares in Saudi Aramco.
“The private-sector stimulation packages aim to strengthen competitive capabilities of a number of segments of the national economy, develop its outcomes as well as improve the business and investment environment and facilitate their implementation,” the CIC added.
Other smaller items in the stimulus package include an export promotion program worth SR5 billion, and a broadband and optical fiber investment worth SR2.56 billion, and measures to invest in high-efficiency air-conditioning units.
Commerce and Investment Minister Majid Al-Qasabi explained in an interview with Bloomberg that the package was part of a SR200 billion, four-year program announced last year to spur the private sector to faster growth and higher rates of job creation.
“Next year is the year for stimulus. That’s how we will strengthen our bonds with local and international investors,” Al-Qasabi said.
Economists have been looking for an upturn in the non-oil sector for some time. Fahad Al-Turki, chief economist with investment bank Jadwa, said: “The government’s efforts to raise non-oil revenue through structured economic reform seems to be bearing fruit … We expect to see a significant ramp-up in government capital spending in the final quarter of 2017.”
The full 2018 budget will be announced in Riyadh next week, with economists expecting further guidance on the progress of the non-oil sector. There was however some skepticism among experts over whether the stimulus package would be enough to significantly affect growth rates, which have fallen to near zero for the overall economy this year, according to the IMF, and are forecast at just 1.1 percent next year.
Monica Malik, chief economist of Abu Dhabi Commercial Bank, told the Financial Times: “Finally seeing signs of the plan is clearly positive. However, the success of the stimulus framework is dependent on how well it integrates private-sector capabilities with the government’s development objectives. A framework that provides funding or support for the private-sector investment would likely not drive a pick-up in activity given the weak domestic backdrop.”
Other analysts have detected some signs of recovery in the non-oil and consumer sector. “Trade data shows that in the three months to September, non-oil imports declined at their slowest pace since late 2015. Data on ATM withdrawals and point-of-sale transactions suggest that the reversal of cuts to civil service bonuses is finally providing some support to consumer spending,” said Jason Tuvey, Middle East economist at London-based Capital Economics.
But he did not necessarily see a significant fiscal boost to the economy from next week’s budget. “Overall, we still expect fiscal policy to be tightened, but there has been a shift, away from spending cuts in the ‘austerity’ phase to revenue-raising measures next year,” he added.
In 2018, government revenue will be boosted by the introduction of value added tax, while expenditure will be reduced by the reduction or elimination of some subsidies.
Saudi Arabia plans $19bn boost for private sector
Saudi Arabia plans $19bn boost for private sector
Arab region on recovery path with 3.7% growth in 2026, but geopolitical risks persist: ESCWA
RIYADH: The Arab region is on a path of gradual economic recovery this year, according to a UN report that forecast growth reaching 3.7 percent and a gradual decline in inflation.
The UN Economic and Social Commission for Western Asia warned in its Macroeconomic Outlook for the Arab region that the persistence of geopolitical fog and risks to global trade remains a pressure factor on the region’s growth prospects.
ESCWA projected regional gross domestic product to have grown by 2.9 percent in 2025 before accelerating to 3.7 percent in 2026, supported by diversification efforts, fiscal reforms, and investment in non-hydrocarbon sectors.
Inflation across the region is expected to decline from 8.2 percent in 2025 to 5.4 percent by 2027, driven by easing commodity prices and the normalization of supply chains, the report said.
In its latest economic update, the World Bank said that regional GDP in the Middle East, North Africa, Afghanistan, and Pakistan is projected to grow by 3.3 percent in 2026, driven by stronger-than-expected performance in Gulf Cooperation Council countries and developing oil importers.
However, ESCWA warned that “ongoing conflicts, trade disruptions and elevated global tariff uncertainties continue to steer the economic outlook,” citing the spillover effects from the war on Gaza, tensions between Iran and Israel, and the volatile situation in several Arab countries, including Sudan, Yemen, and Syria.
The report highlighted a widening divergence in growth prospects among Arab economies. High-income Gulf countries are driving the regional recovery through diversification into manufacturing, tourism, and digital sectors.
For investors eyeing this shift, a key question is which specific non-oil industries offer the most resilient returns despite the persistent geopolitical risks. Ahmed Moummi, economic affairs officer at ESCWA, told Arab News that beyond the headline sectors, the most sustainable opportunities lie in the real economy.
“In general, real sectors have sustainable returns, particularly industry and agriculture. Investing in the latest technologies in the industrial or the agricultural sectors are likely to enhance returns and ensure sustainability of the business, like agri-business, food processing, fisheries, and tourism,” he said in an interview.
Saudi Arabia’s real GDP is projected to grow by an average of 3.3 percent during 2025-2027, supported by increased investment in manufacturing, real estate, and tourism, while the UAE is expected to achieve 4.5 percent average growth over the same period.
Middle-income countries face more significant challenges, including high debt burdens, inflation, and external shocks.
According to the ESCWA, the situation remains dire for conflict-affected low-income countries, including Somalia, Sudan, Syria, and Yemen. These economies are projected to contract by 0.9 percent in 2025 before modestly recovering to 1.7 percent growth in 2026, assuming conflicts de-escalate and reconstruction efforts begin.
With growth so uneven across high-income, middle-income, and conflict-affected economies, the question arises as to what business models or sectors are best positioned to succeed across this fragmented regional landscape. The answer, according to Moummi, lies in resilience through diversification.
“Diversified economies with diversified sources of income are the best models given the overall geopolitical and global landscape,” he said. “Investing in real sectors generates employment and realizes sustainable and inclusive economic growth. Also investing in knowledge economy and in skills’ development would ensure also that labor force would be agile and would fit for future jobs.”
The analysis warned that elevated tariffs announced by the US in April 2025 have increased trade uncertainty globally. While energy products are currently exempt, textiles, fertilizers, chemicals, aluminum, and electronics now face high US tariffs, affecting several Arab countries.
Jordan stands to be most impacted, with around 25 percent of its total exports directed to the US.
Bahrain, and Egypt, as well as Lebanon, Morocco, and Tunisia will be affected to a lesser extent, as their US exports average around 5 percent.
An indirect impact may emanate from potential slowdowns in the region’s main trading partners, particularly China and the EU, which together account for nearly one-third of Arab exports.
ESCWA has developed machine-learning-based “nowcasting” models piloted for Egypt and Saudi Arabia that integrate conventional and alternative data sources, including Google Trends and satellite imagery, to enable near-real-time GDP estimation.
“Nowcasting integrates conventional and alternative data sources and enables near-real-time GDP estimation, enhances policy responsiveness, and provides a scalable framework for evidence-based economic assessment in the region,” the report stated.
For Egypt, the models point to a 4 percent annual real GDP growth rate for 2025, while Saudi Arabia’s growth is nowcast at 4.3 percent for the same year.
The release concluded that achieving lasting peace and stability is fundamental for recovery and long-term development. It called for sustained aid and concessional financing to support reconstruction and human capital investment in conflict-affected countries.
“Diversification, fiscal consolidation and improved debt management are needed to preserve macroeconomic stability, decrease dependence on hydrocarbon revenues, generate employment, and create fiscal space for productive investment and social spending,” ESCWA said.
