عربي English Türkçe اردو فارسى
Logo
Latest News
Business

IMF: Saudi Non-Oil Growth Will Stay Strong

IMF: Saudi Non-Oil Growth Will Stay Strong
TT
TT

IMF: Saudi Non-Oil Growth Will Stay Strong

IMF: Saudi Non-Oil Growth Will Stay Strong

Amine Mati, head of the International Monetary Fund (IMF) mission to Saudi Arabia, stated that any decline in oil prices is unlikely to hinder the Kingdom’s non-oil economic growth.

He highlighted that domestic demand will continue to drive strong non-oil activity, underscoring the importance of Saudi Arabia’s shift away from oil dependency.

At a seminar hosted by the SRMG-THINK research center to discuss the IMF’s recent report, Mati addressed questions from Asharq Al-Awsat, saying, “Unless there’s a prolonged drop in oil prices, we expect projects to move forward.”

He added that the separation from oil is crucial for the non-oil economy, and without a sustained decline in oil prices, he believes many projects will still come to fruition.

Mati also dismissed concerns regarding OPEC+ delaying its oil production increase by two months, calling it a “minor delay” with little impact on non-oil sectors, which are supported by domestic demand.

Regarding China’s economic struggles, Mati indicated that Saudi Arabia’s growth would remain stable. He explained that while lower oil prices could affect fiscal and current account balances, the overall investment trend would continue.

“A $10 drop in oil prices could increase the fiscal deficit by about 2.5% of GDP,” he noted.

He projected that strong domestic demand will keep non-oil GDP growth at 3.5% in 2024, with a potential increase in investment from the Public Investment Fund, rising from $40 billion to $70 billion annually in the coming years.

He expects non-oil GDP growth to range from 3.9% to 4.4%, with full implementation of reform strategies potentially increasing growth to 8%.

Mati praised Saudi Arabia’s recent adjustments to fiscal spending, which he believes will ensure financial sustainability.

He pointed to stable inflation, declining unemployment, and strong financial reserves as positive indicators for the economy. He stressed the importance of prudent fiscal management to maintain financial stability and continued structural reforms for sustainable growth.

Neda Al-Mubarak, Managing Director of SRMG-THINK, welcomed attendees and highlighted the significance of the IMF report in relation to Saudi Arabia’s Vision 2030 national transformation plan.

Most Viewed

 
 
Business

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)
TT
TT

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.