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OECD Expects Economic Growth in Saudi Arabia to Reach 3.1% in 2024

The OECD expected Saudi economic growth to accelerate to 3.1% next year. (Photo: Reuters)
The OECD expected Saudi economic growth to accelerate to 3.1% next year. (Photo: Reuters)
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OECD Expects Economic Growth in Saudi Arabia to Reach 3.1% in 2024

The OECD expected Saudi economic growth to accelerate to 3.1% next year. (Photo: Reuters)
The OECD expected Saudi economic growth to accelerate to 3.1% next year. (Photo: Reuters)

The Organization for Economic Cooperation and Development (OECD) expected the global economy to slow next year, affected by interest rate increases and the disappointing outlook for the Chinese recovery.

On the other hand, the OECD said Saudi economic growth was likely to accelerate to 3.1 percent next year, with the real gross domestic product achieving a growth of 1.9 percent in 2023.

According to its latest forecasts issued on Tuesday, the organization said that the annual inflation rate in the Kingdom was expected to remain stable at 2.5 percent this year, and to decline to 2.1 percent in 2024.

Based on the latest data issued by the Saudi General Authority for Statistics (GASTAT), the Kingdom’s economy grew 1.2 percent in the second quarter of 2023 compared to the same period last year. The annual inflation rate fell to 2 percent last August, compared to 2.3 percent in July.

Earlier this month, the International Monetary Fund (IMF) said that the prospects for the Saudi economy were positive, in light of expectations that the Kingdom’s non-oil GDP growth momentum will remain strong.

In contrast to the promising expectations for the Saudi economy, the OECD said that the growth of the US economy would help curb the global slowdown this year, but added that the weakness of the Chinese economy would constitute a greater obstacle in 2024.

The Paris-based organization said: “Global GDP is anticipated to decline after a stronger-than-expected start to 2023, aided by reduced energy prices and China’s reopening.”

It added: “The effects of tighter monetary policy are becoming more apparent, consumer and corporate confidence are declining, and China's recovery is losing steam.”

The organization expected Chinese economic growth to slow from 5.1 percent this year to 4.6 percent in 2024, as momentum from the end of Covid-19 restrictions is fading and the real estate market suffering.

In June, the OECD forecast growth of 5.4 and 5.1 percent in 2023 and 2024, respectively.

The organization lowered growth expectations in the euro zone this year from 0.9 to 0.6 percent, but expected that next year - with Germany's return to growth - it would rise to 1.1 percent, down from a forecast of 1.5 percent in June.

The OECD advised against easing monetary policy prematurely, emphasizing the need for restrictive measures until there are clear signs that underlying inflation pressures have substantially diminished.

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Revenue Growth, Improved Operational Efficiency Boost Profitability of Saudi Telecom Companies

A man monitors the movement of stocks on the Saudi Tadawul index. (AFP)
A man monitors the movement of stocks on the Saudi Tadawul index. (AFP)
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Revenue Growth, Improved Operational Efficiency Boost Profitability of Saudi Telecom Companies

A man monitors the movement of stocks on the Saudi Tadawul index. (AFP)
A man monitors the movement of stocks on the Saudi Tadawul index. (AFP)

Telecommunications companies listed on the Saudi Stock Exchange (Tadawul) achieved a 12.46 percent growth in their net profits, which reached SAR 4.07 billion ($1.09 billion) during the second quarter of 2024, compared to SAR 3.62 billion ($965 million) during the same period last year.

They also recorded a 4.76 percent growth in revenues during the same quarter, after achieving sales worth more than SAR 26.18 billion ($7 billion), compared to SAR 24.99 billion ($6.66 billion) in the same quarter of 2023.

The growth in the revenues and net profitability is the result of several factors, including the increase in sales volume and revenues, especially in the business sector and fifth generation services, as well as the decrease in operating expenses and the focus on improving operational efficiency, controlling costs, and moving towards investment in infrastructure.

The sector comprises four companies, three of which conclude their fiscal year in December: Saudi Telecom Company (STC), Mobily, and Zain Saudi Arabia. The fiscal year of Etihad Atheeb Telecommunications Company (GO) ends on March 31.

According to its financial results announced on Tadawul, Etihad Etisalat Company (Mobily) achieved a 33 percent growth rate of profits, bringing its profits to SAR 661 million by the end of the second quarter of 2024, compared to SAR 497 million during the same period in 2023. The company also achieved a 4.59 percent growth in revenues to reach SAR 4.47 billion, compared to SAR 4.27 billion in the same quarter of last year.

The Saudi Telecom Company achieved the highest net profits among the sector’s companies, at about SAR 3.304 billion in the second quarter of 2024, compared to SAR 3.008 billion in the same quarter of 2023. The company registered a growth of 4.52 percent in revenues.

On the other hand, the revenues of the Saudi Mobile Telecommunications Company (Zain Saudi Arabia) increased by about 6.69 percent, as it recorded SAR 2.55 billion during the second quarter of 2024, compared to SAR 2.39 billion in the same period last year.

Commenting on the quarterly results of the sector’s companies, and the varying net profits, the head of asset management at Rassanah Capital, Thamer Al-Saeed, told Asharq Al-Awsat that the Saudi Telecom Company remains the sector leader in terms of customer base expansion.

He also noted the continued efforts of Mobily and Zain to offer many diverse products and other services.

Financial advisor at the Arab Trader Mohammed Al-Maymouni said the financial results of telecom sector companies have maintained a steady growth, up to 12 percent, adding that Mobily witnessed strong progress compared to the rest of the companies, despite the great competition which affected its revenues.

He added that Zain was moving at a good pace and its revenues have improved during the second quarter of 2024. However, its profits were affected by an increase in the financing cost by SAR 26.5 million riyals and a rise in interest, while net income declined significantly compared to the previous year, during which the company made exceptional returns.