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Saudi Arabia Registers in October Lowest Inflation Level in Two Years

A supermarket in Saudi Arabia (SPA)
A supermarket in Saudi Arabia (SPA)
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Saudi Arabia Registers in October Lowest Inflation Level in Two Years

A supermarket in Saudi Arabia (SPA)
A supermarket in Saudi Arabia (SPA)

Saudi Arabia was able to record the lowest level of inflation rate in nearly two years at 1.6 percent in October, on an annual basis - the same rate registered in February 2022.
Moody’s on Wednesday raised its expectations for the growth of the Kingdom’s economy next year to 4.6 percent. The consumer price index in the Kingdom continues to decline for the fourth month in a row, recording 1.7 percent in September 2023, compared to the same period last year.
Data issued by the General Authority for Statistics (GASTAT) on Wednesday, showed that actual housing rents rose by 9.3 percent during October, affected by the increase in apartment rental prices by 14.9 percent.
The rise of this category had a significant impact on the rise in annual inflation for October 2023, due to its large weight in the index, which amounts to 21 percent.
Food and beverage prices increased by 0.8 percent, affected by a 4.4 percent rise in the prices of milk, dairy products, and eggs.
In this context, experts told Asharq Al-Awsat that the government was adopting accelerated measures to confront the global rise in the inflation rate. Those include fixing the ceiling on fuel prices and countries bearing the difference in the increase, as well as supporting small livestock breeders and increasing strategic stocks of basic materials.
Economist Ahmed Al-Jubeir told Asharq Al-Awsat that the government was controlling the inflation rate, thanks to a series of measures, including stabilizing fuel prices and increasing strategic stocks of basic materials.
He added that inflation in the Kingdom was one of the lowest compared to advanced economies.
For his part, economic expert Ahmed Al-Shehri told Asharq Al-Awsat that the decline in inflation was due to the central bank’s tightening monetary policy by raising the interest rate, in line with the decision of the US Federal Reserve, in addition to government measures related to supporting strategic stocks of basic materials and stabilizing fuel prices.
Meanwhile, Moody’s Investors Service report said that Saudi Arabia’s gross domestic product growth forecast for 2024 was now 4.6 percent, compared to a previous calculation of 3 percent.
Moody’s indicated that the Kingdom’s credit strengths come from its robust government balance sheet, supported by large foreign currency buffers.

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Saudi Arabia's Digital Advertising Boom: Addressing Economic Leakage, Boosting Local Content

A digital advertising event recently held in Riyadh (Asharq Al-Awsat)
A digital advertising event recently held in Riyadh (Asharq Al-Awsat)
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Saudi Arabia's Digital Advertising Boom: Addressing Economic Leakage, Boosting Local Content

A digital advertising event recently held in Riyadh (Asharq Al-Awsat)
A digital advertising event recently held in Riyadh (Asharq Al-Awsat)

Saudi Arabia’s digital advertising sector is experiencing rapid growth, but a significant portion of its revenues is leaking to foreign platforms. To maximize the impact on the national economy, experts are calling for strategies to curb this outflow and redirect it to local channels.

The importance of retaining digital ad revenues lies in the substantial size of this market. It is estimated that approximately $1 billion in ad spent is lost annually to foreign platforms, representing a considerable loss to Saudi Arabia’s economy.

Dr. Ebada Al-Abbad, CEO of Marketing and Communications at Tadafuq, a Saudi digital advertising network, told Asharq Al-Awsat that the problem stems from the fact that although advertisers, products, and audiences are often local, the largest share of financial gains goes to foreign platforms. He estimated that 70-80% of the $1.5 billion spent on digital advertising in Saudi Arabia in 2022 went to global platforms such as Google and Facebook. This results in the national economy losing nearly $1 billion annually from this sector alone.

Al-Abbad noted that government agencies in Saudi Arabia also contribute to the outflow. He explained that public sector spending on digital advertising, intended to raise awareness among citizens and residents, frequently ends up on foreign platforms. Government spending makes up about 20-25% of the total digital ad market in the Kingdom, meaning hundreds of millions of riyals leave the country annually, weakening the local digital economy.

Al-Abbad argues that Saudi Arabia needs strong local digital ad networks to keep this revenue within the national economy. These networks would help create jobs, drive innovation, and promote cultural diversity in digital content. Developing local platforms would also enhance Saudi Arabia’s digital sovereignty by ensuring that data remains within the country and is not controlled by foreign entities.

Moreover, local networks would reduce dependence on international platforms, ensuring that the economic benefits of digital advertising remain in the Kingdom, he said, stressing that this would align with Saudi Arabia’s broader Vision 2030 goals, which emphasize building a robust, diversified economy driven by local industries and digital transformation.

Globally, the digital advertising sector is growing rapidly. In 2022, worldwide spending on digital ads reached $602 billion, and it is projected to hit $876 billion by 2026. In the Middle East and North Africa (MENA) region, the digital ad market grew to $5.9 billion in 2022, with Saudi Arabia’s market accounting for over $1.5 billion.

In other countries, the digital ad sector plays a crucial role in boosting national economies. For example, in the United States, the digital advertising industry contributed $460 billion to the GDP in 2021, about 2.1% of the total. In the UK, the sector accounted for 1.8% of GDP in 2022. This shows how important digital advertising can be in driving economic growth.

One of the key challenges facing Saudi Arabia’s digital ad sector is the dominance of global platforms like Google and Facebook, which control 60% of the global digital ad market, Al-Abbad told Asharq Al-Awsat. This dominance results in a significant outflow of revenue and allows these platforms to control digital data and content. He warned that this could undermine Saudi Arabia’s national sovereignty over its digital economy.

To counter this, he emphasized that Saudi Arabia needs to build competitive local networks that can retain a larger share of the market. This will not only keep more revenue in the country but also strengthen the Kingdom’s control over its digital data and content.