Saudi Arabia GDP growth higher than G20 average: OECD

The report highlighted that while Saudi Arabia experienced a significant recovery, other G20 countries faced varying economic conditions. Shutterstock
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Updated 13 June 2024
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Saudi Arabia GDP growth higher than G20 average: OECD

RIYADH: Saudi Arabia’s economy witnessed growth of 1.4 percent in the first quarter of 2024 – higher than that seen across the G20 as a whole, according to new data.

The Organisation for Economic Co-operation and Development has released its latest gross domestic product report for the G20 countries, noting that the Kingdom bounced back from a contraction of 0.6 percent in the previous three-month period. 

GDP in the G20 area grew by 0.9 percent quarter-on-quarter in the first quarter of 2024, slightly up from 0.7 percent in the previous quarter. 

The economic performance of the G20 area was primarily driven by China and India, with Turkiye, Korea, and Indonesia also recording higher GDP growth than the G20 average. 

Turkiye led with an increase of 2.4 percent, followed by India at 1.9 percent, China at 1.6 percent, Korea at 1.3 percent, and Indonesia at 1.2 percent. 

The report highlighted that while Saudi Arabia experienced a significant recovery, other G20 countries faced varying economic conditions. 

The US saw a slowdown, with GDP growth dropping to 0.3 percent in the first three months of the year from 0.8 percent in the previous quarter. 

Japan’s economy contracted by 0.5 percent, and South Africa saw a contraction of 0.1 percent. 

Conversely, Brazil, the UK, and Germany showed signs of recovery in the first quarter of 2024 after contractions over the previous three month period, with growth reaching 0.8 percent, 0.6 percent, and 0.2 percent, respectively. 

Canada, Mexico, and the EU grew by 0.4 percent, 0.3 percent, and 0.3 percent, respectively, in the three months to the end of March, after zero growth in the final quarter of 2023. 

Year-on-year, GDP in the G20 area grew by 3.3 percent in the first three months of the year, maintaining the same growth rate as the previous quarter. 

Among G20 economies, India recorded the highest year-on-year growth rate at 8.4 percent in the first quarter of 2024, followed by Turkiye at 7.4 percent. 

However, Saudi Arabia recorded the most significant year-on-year decline at a drop of 1.5 percent. 

According to a separate report by the General Authority for Statistics released earlier in June, the Kingdom’s non-oil activities also rose by 0.9 percent in the first three months of this year compared to the previous quarter.  

Additionally, non-oil activities increased by 3.4 percent year-on-year in the first quarter of 2024.  

GASTAT further noted that Saudi Arabia’s GDP amounted to SR1.01 trillion ($270 billion) in the first quarter.  

“Crude oil and natural gas activities achieved the highest contribution to GDP by 23.4 percent, followed by government activities at 15.8 percent, and then wholesale and retail trade, restaurants, and hotels activities with a contribution of 10.4 percent,” said GASTAT in the report.  

Strengthening the non-oil private sector is crucial for Saudi Arabia, as the Kingdom is steadily diversifying its economy to reduce its decades-long dependence on oil.  

The report further noted that government activities in Saudi Arabia rose by 2 percent year-on-year in the first quarter while declining by 1.1 percent on a quarter-on-quarter basis.  

GASTAT added that the Kingdom’s oil activities increased by 1.7 percent in the first quarter compared to the previous quarter.  

However, oil activities dipped by 11.2 percent year-on-year as Saudi Arabia reduced its crude production in line with the decision of the Organization of the Petroleum Exporting Countries and its allies, collectively known as OPEC+.  

To maintain market stability, Saudi Arabia reduced its oil output by 500,000 barrels per day in April 2023, and this cut has now been extended until December 2024.  

In April, the International Monetary Fund projected that Saudi Arabia’s economy would grow by 2.6 percent in 2024 and 6 percent in 2025.  

In the same month, the World Bank also raised the growth prospects of the Kingdom’s economy to 5.9 percent in 2025, up from an earlier projection of 4.2 percent. 

Furthermore, Saudi Arabia’s gross fixed capital formation surged to SR317.5 billion in the first quarter of 2024, marking a significant 7.9 percent increase compared to the same period last year. 

According to a separate report by the Saudi Ministry of Investment released earlier this month, gross fixed capital formation expansion was driven by growth in both the government and non-government sectors.  

GFCF, which represents the net increase in physical assets within an economy, plays a crucial role in gross domestic product as it reflects capital accumulation supporting future production capabilities and economic growth. 

Of the total GFCF, the government sector contributed 7 percent, experiencing a robust growth rate of 18 percent. Meanwhile, the non-government sector, constituting 93 percent, also saw a substantial rise of 7.2 percent. 

Saudi Arabia’s proactive efforts to attract foreign direct investment and bolster bilateral relations have significantly strengthened the Kingdom’s economic trajectory.  

FDI serves as a pivotal catalyst for GFCF development, facilitating funding for investment projects and resource and knowledge transfer across borders, thereby fostering economic expansion and maturation. 

Key initiatives such as the National Investment Strategy, the Regional Headquarters Program, and zero-income tax incentives for foreign entities play a vital role in advancing Vision 2030, which aims to diversify and expand the economy. 

During this quarter, the Ministry of Investment issued 3,157 investment licenses, marking a 93 percent surge compared to the same period last year, excluding licenses issued under the anti-concealment law. 

In its economic and investment monitor released in late May, the ministry revealed that the construction and manufacturing sector dominated with 47 percent of total permits, followed by vocational and educational activities, information and communication technology and accommodation and food services as well as wholesale and retail trade. 

The real estate sector witnessed the most significant year-on-year growth, with a staggering 253.3 percent increase in investment licenses. 

Furthermore, 127 international firms secured permits to relocate their regional headquarters to Saudi Arabia in the first quarter of 2024, reflecting a remarkable 477 percent year-on-year upsurge. 

Leading corporations such as Google, Microsoft and Amazon as well as Northern Trust, Bechtel, IHG Hotels & Resorts, and Deloitte have established operations in the Kingdom under this program. 

The report also highlights that Saudi Arabia processed 445 applications for investor visit visas during the first quarter of this year, enabling overseas businesspersons to explore opportunities in the country. 


Saudia Cargo, Henan Aviation Group ink deal to bolster routes between Riyadh, Zhengzhou

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Saudia Cargo, Henan Aviation Group ink deal to bolster routes between Riyadh, Zhengzhou

RIYADH: Saudi Arabia and China are strengthening their air cargo cooperation through a new agreement to create a joint freight hub as part of the Air Silk Road initiative.

The deal, inked between Saudia Cargo and Henan Aviation Group, will see new new routes opened between Riyadh and Zhengzhou, according to a statement.

This correlates with the Saudi Aviation Strategy, which recognizes the need to increase air connectivity with key markets such as China as part of the Kingdom’s goal of transporting 4.5 million tonnes of air cargo by 2030.

The statement further highlighted that the agreement aims to “support integrated logistics services and free trade zone development” and “advance sustainability and cross-border e-commerce through logistics innovation.”

It also seeks to explore investment opportunities in the high-tech and aviation sectors in Zhengzhou.

The MoU came during a meeting held by President of the General Authority of Civil Aviation Abdulaziz bin Abdullah Al-Duailej in Riyadh with Henan Province Vice Governor Sun Shougang to bolster investments between the two countries, the Saudi Press Agency reported.

During the discussion, the two sides discussed strengthening economic relations, focusing on fostering high-quality investments for leading firms and empowering the private sector to seize available opportunities. Both parties also explored enhancing Saudi-Chinese air transport in alignment with Vision 2030 and the Saudi Aviation Strategy.

GACA also held a Saudi-Chinese roundtable to explore collaboration opportunities in logistics zones and air cargo. The meeting included the Chairman of China Henan Aviation Group, along with representatives from national carriers and logistics firms.

The roundtable also included various Saudi government entities, such as the Ministry of Energy, the Ministry of Investment, and the Ministry of Transport and Logistic Services, as well as the Saudi General Authority of Foreign Trade, the Economic Cities and Special Zones Authority, the Industrial Center, and the Air Connectivity Program.
 
The Chinese delegation conducted a field visit to the Special Integrated Logistics Zone in Riyadh and the cargo zones at King Abdulaziz International Airport in Jeddah, where they observed operational capabilities, cargo-handling facilities and zones, e-commerce shipments, and the digital capabilities and mechanisms in use.

The delegation also visited King Khalid International Airport in Riyadh, where they toured the Airport Operations Control Center to observe the services provided as well as explored the commercial areas, and duty-free store.
 
China’s COSCO Shipping unveils Dammam office

Chinese company COSCO Shipping has launched its first office in the Kingdom in Dammam in an attempt to enhance operational efficiency and logistical connectivity.

This move also strengthens the firm’s partnership with the Saudi Ports Authority, or Mawani, supports trade growth, and achieves the goals of the nation’s Vision 2030 of consolidating the Kingdom’s position as a global logistics hub.
 
Saudi NHC continues house building deal with Chinese firm

Saudi Arabia’s National Housing Co. has extended its partnership with China State Construction Engineering Corporation, which aims to build 20,000 housing units within NHC destinations.

The partnership has been realized through the launch of multiple projects across NHC sites in the Eastern Region, Riyadh, and Jeddah, delivering over 3,800 housing units.

It comes as an extension of the Saudi-Chinese partnership series and several agreements signed with Chinese firms during the official visit to China by Minister Al-Hogail and NHC CEO Mohammed bin Saleh Al-Buty.

NHC stated that the partnership extends its efforts to enhance the real estate supply and inject more housing units through quality partnerships with major international companies to establish urban destinations with high-quality standards across the Kingdom.


Saudi Aramco lowers propane, butane prices for May

Updated 51 min 33 sec ago
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Saudi Aramco lowers propane, butane prices for May

RIYADH: Saudi Aramco has reduced its official selling prices for propane and butane for May 2025, according to a company statement issued on Tuesday.

The price of propane was cut by $5 per tonne to $610, while butane saw a steeper reduction of $15 per tonne, bringing it to $590. The adjustments reflect shifts in market conditions and follow a downward trend from the previous month.

Propane and butane, both classified as liquefied petroleum gas, are widely used for heating, as vehicle fuel, and in the petrochemical industry. Their differing boiling points make each suitable for distinct industrial and domestic applications.

Aramco’s LPG prices are considered key benchmarks for supply contracts from the Middle East to the Asia-Pacific region.

The global LPG market is undergoing a significant shift as steep tariffs on US imports prompt Chinese buyers to replace American cargoes with supplies from the Middle East.

Meanwhile, US shipments are being redirected to Europe and other parts of Asia.

This realignment is expected to put downward pressure on prices and demand for shale gas byproducts, posing financial challenges for both US shale producers and Chinese petrochemical companies. At the same time, it is likely to drive increased interest in alternative feedstocks such as naphtha.

Middle Eastern suppliers are emerging as key beneficiaries, filling the gap left by reduced US exports to China. In addition, opportunistic buyers in Asian markets like Japan and India are capitalizing on the price drops to secure more favorable deals.


Trump to reduce impact of auto tariffs, commerce secretary says

Updated 29 April 2025
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Trump to reduce impact of auto tariffs, commerce secretary says

WASHINGTON: President Donald Trump’s administration will move to reduce the impact of his automotive tariffs on Tuesday by alleviating some duties imposed on foreign parts in domestically manufactured cars and keeping tariffs on cars made abroad from piling on top of other ones, officials said.

“President Trump is building an important partnership with both the domestic automakers and our great American workers,” Commerce Secretary Howard Lutnick said in a statement provided by the White House.

“This deal is a major victory for the President’s trade policy by rewarding companies who manufacture domestically, while providing runway to manufacturers who have expressed their commitment to invest in America and expand their domestic manufacturing.”

The Wall Street Journal, which first reported the development, said the move meant car companies paying tariffs would not be charged other levies, such as those on steel and aluminum, and that reimbursements would be given for such tariffs that were already paid.

A White House official confirmed the report and indicated the move would be made official on Tuesday.

Trump is traveling to Michigan on Tuesday to commemorate his first 100 days in office, a period that the Republican president has used to upend the global economic order.

The move to soften the effects of auto levies is the latest by his administration to show some flexibility on tariffs, which have sown turmoil in financial markets, created uncertainty for businesses and sparked fears of a sharp economic slowdown.

Automakers said earlier on Monday they were expecting Trump to issue relief from the auto tariffs ahead of his trip to Michigan, which is home to the Detroit Three automakers and more than 1,000 major auto suppliers.

General Motors, CEO Mary Barra and Ford CEO Jim Farley praised the planned changes. “We believe the president’s leadership is helping level the playing field for companies like GM and allowing us to invest even more in the US economy,” Barra said.

Farley said the changes “will help mitigate the impact of tariffs on automakers, suppliers and consumers.”

Last week, a coalition of US auto industry groups urged Trump not to impose 25 percent tariffs on imported auto parts, warning they would cut vehicle sales and raise prices.

Trump had said earlier he planned to impose tariffs of 25 percent on auto parts no later than May 3.

“Tariffs on auto parts will scramble the global automotive supply chain and set off a domino effect that will lead to higher auto prices for consumers, lower sales at dealerships and will make servicing and repairing vehicles both more expensive and less predictable,” the industry groups said in the letter.

The letter from the groups representing GM, Toyota Motor, Volkswagen, Hyundai and others, was sent to US Trade Representative Jamieson Greer, Treasury Secretary Scott Bessent and Commerce’s Lutnick.

“Most auto suppliers are not capitalized for an abrupt tariff induced disruption. Many are already in distress and will face production stoppages, layoffs and bankruptcy,” the letter added, noting “it only takes the failure of one supplier to lead to a shutdown of an automaker’s production line.” 


IMF Executive Board to meet on May 9 to review Pakistan’s loan programs

Updated 29 April 2025
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IMF Executive Board to meet on May 9 to review Pakistan’s loan programs

  • IMF board’s approval of staff-level agreement with Pakistan will pave the way for disbursement of $1 billion
  • Islamabad also secured a new loan program with IMF in March to help build resistance against natural disasters 

KARACHI: The International Monetary Fund’s (IMF) Executive Board will meet on May 9 to review its staff-level agreement with Pakistan for an ongoing $7bn bailout program and a new climate resilience loan scheme with Islamabad, the global lender said on its website recently. 

The IMF reached a staff-level agreement with Pakistan in March on the first review of the country’s Extended Fund Facility (EFF) and a new $1.3 billion loan arrangement under the Resilience and Sustainability Facility (RSF). Pakistan secured the EFF program last year and deems it crucial to escape a prolonged economic crisis. The staff-level agreement, once approved by the IMF Executive Board, will pave the way for an immediate disbursement of about $1 billion for Pakistan.

The RSF, on the other hand, will support Pakistan’s efforts in building resilience to natural disasters, enhancing budget and investment planning to promote climate adaptation, improve the efficient and productive use of water. It will also help in strengthening Pakistan’s climate information architecture to improve the disclosure of climate risks and align energy sector reforms with mitigation targets.

“May 9, 2025, Pakistan-first review under the extended arrangement under the Extended Fund Facility, request for Modification of Performance Criteria, and request for an arrangement under the Resilience and Sustainability Facility,” the IMF wrote on its website on Friday, disclosing its Executive Board’s schedule. 

Pakistan has been prone to natural disasters and consistently ranks among the most severely affected countries in the world due to climate change effects. Unusually heavy rains and melting of glaciers in 2022 triggered flash floods across the country, killing over 1,700 people and inflicting losses over $33 billion. 

The IMF program has played a key role in stabilizing Pakistan’s battered economy, which has made some gains in recent months, most notably a reduced inflation rate. The government has said the country is on course for a long-term recovery, while Finance Minister Muhammad Aurangzeb has vowed Islamabad will continue to implement financial reforms mandated by the international lender. 

Pakistan secured the $7 billion loan program in September 2024 as it attempted to consolidate its economy since averting a default in 2023. Islamabad has since undertaken several reforms to reduce public debt, maintain low inflation, improve energy sector viability, and accelerate growth.

Pakistan hopes to achieve further economic progress by increasing its exports and attracting foreign investment from regional allies, particularly the Gulf countries. Islamabad has signed memoranda of association (MoUs) regarding trade and investment worth billions of dollars with Saudi Arabia, the United Arab Emirates, Azerbaijan, China and other countries in recent months. 


Oil Updates — crude falls as economic jitters dampen demand outlook

Updated 29 April 2025
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Oil Updates — crude falls as economic jitters dampen demand outlook

SINGAPORE: Crude oil prices fell on Tuesday as investors lowered their demand growth expectations due to the ongoing trade war between the US and China, the world’s two biggest economies.

Brent crude futures fell by 78 cents, or 1.18 percent, to $65.08 per barrel by 10:49 a.m. Saudi time. US West Texas Intermediate crude futures fell 75 cents, or 1.21 percent, to $61.30 a barrel. Both benchmarks fell more than $1 on Monday.

“Markets are closely monitoring the US-China trade negotiations, understanding that deteriorating trade relations between the world’s two largest economies could lead the global economy toward a recession,” said Priyanka Sachdeva, senior market analyst at Phillip Nova.

“The lack of confidence in future demand and the absence of concrete signals for demand revival in mainland China will continue to overshadow oil prices.”

US President Donald Trump’s push to reshape world trade by imposing tariffs on all US imports has created a high risk that the global economy will slip into a recession this year, according to a majority of economists in a Reuters poll.

China, hit with the steepest of those tariffs, has responded with its own levies against US imports, stoking a trade war between the top two oil consuming nations. That has prompted analysts to sharply lower their oil demand and price forecasts.

Barclays on Monday cut its 2025 Brent crude price forecast by $4 to $70 a barrel, citing elevated trade tensions and a pivot in production strategy by the OPEC+ group as drivers of a 1 million barrel per day oil supply surplus this year.

Meanwhile, several members of OPEC+, which comprises the Organization of the Petroleum Exporting Countries and its allies, will suggest an acceleration of output hikes for a second consecutive month in June, sources told Reuters last week.

“A substantial (oil) price decrease appears probable if exporting countries boost production,” oil analyst Philip Verleger said in a note.

US crude oil stockpiles also likely rose by about 500,000 barrels in the week ended April 15, according to a preliminary Reuters poll of analysts on Monday.

Industry group American Petroleum Institute will publish its estimates on US oil inventories on Tuesday. Official figures from the Energy Information Administration will follow on Wednesday.