World Bank Country Director for GCC: Non-Oil Sector to Drive Saudi Growth

World Bank’s Country Director for the Gulf Cooperation Council Safaa El-Kogali
World Bank’s Country Director for the Gulf Cooperation Council Safaa El-Kogali
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World Bank Country Director for GCC: Non-Oil Sector to Drive Saudi Growth

World Bank’s Country Director for the Gulf Cooperation Council Safaa El-Kogali
World Bank’s Country Director for the Gulf Cooperation Council Safaa El-Kogali

The World Bank expects the Gulf Cooperation Council (GCC) region to grow by 2.8% in 2024 and 4.7% in 2025. This growth is driven by OPEC+ gradually increasing oil production from mid-2024 and strong non-oil economic activities.

In Saudi Arabia, the economy is predicted to grow by 2.5% this year, thanks to a booming non-oil private sector. The non-oil sector is set to grow by 4.8% in 2024, while the oil sector is expected to shrink by 0.8%.

These predictions highlight the GCC’s shift towards diversifying its economies beyond oil.

The World Bank has updated its growth forecast for the GCC region. It now expects a lower growth rate of 2.8% for this year, down from the previous estimate of 3.6%.

However, the growth outlook for next year has increased to 4.7%, up from the earlier projection of 3.7%.

Safaa El-Kogali, the World Bank’s Country Director for the GCC, told Asharq Al-Awsat that the region’s economic performance slowed to 0.7% in 2023 due to OPEC+ oil production cuts, despite strong growth in 2022.

On the other hand, non-oil sectors grew by 3.9%, thanks to ongoing reforms and diversification efforts.

El-Kogali is optimistic about the future, predicting GDP growth of 2.8% in 2024 and 4.7% in 2025. This positive outlook is due to the expected gradual increase in oil production and the continued strong performance of non-oil sectors.

Moreover, the World Bank predicted the GCC’s non-oil GDP will grow by 3.6% this year and 3.5% in the medium term, fueled by expansive fiscal policies, low interest rates, and strong private consumption and investment.

Oil GDP is expected to grow by 1.7% in 2024 and jump to 6.9% in 2025 as oil production quotas gradually increase.

Oil and gas revenues will remain critical for the region’s fiscal policies and external balances. The fiscal surplus for GCC countries is expected to narrow to 0.1% of GDP in 2024, with the current account surplus projected to be 7.5% of GDP, down from 8.4% in 2022.

El-Kogali warned of significant uncertainties and risks.

“The outlook is clouded by uncertainty and downside risks,” she said.

“The conflict in the Middle East poses substantial risks, especially if it escalates or involves other regional actors,” added El-Kogali.

“While such tensions could drive up oil prices, bringing unexpected gains for the GCC, they could also destabilize financial and trade markets and weaken economic confidence,” she explained.

El-Kogali also noted risks like slower growth in China, prolonged high interest rates, and severe climate conditions, all of which could negatively impact the region.

Assessing Saudi Arabia’s economic diversification efforts, El-Kogali said: “Saudi Arabia has already taken significant steps towards realizing its economic potential and diversifying away from oil reliance.”

“Structural reforms have been implemented over the past two years, demonstrating the Kingdom’s commitment to reform,” she asserted.

“Economic diversification lies at the heart of Vision 2030, with all efforts aimed at achieving this national goal. We see Saudi Arabia making significant progress in diversifying the real economy and increasing the contribution of non-oil sectors to GDP.”

“Improvements in public finance revenue diversification are evident, with non-oil revenue increasing from 3.5% of GDP in 2011 to 12% in 2023.”

“However, there’s room for further focus and improvement in diversifying Saudi export baskets, as non-oil exports remain modest, accounting for less than 10% of GDP,” noted El-Kogali.



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.