Saudi Private Sector Grows to Highest Level in 6 Months

People are seen at an employment forum in Saudi Arabia. (SPA)
People are seen at an employment forum in Saudi Arabia. (SPA)
TT

Saudi Private Sector Grows to Highest Level in 6 Months

People are seen at an employment forum in Saudi Arabia. (SPA)
People are seen at an employment forum in Saudi Arabia. (SPA)

Saudi Arabia’s non-oil private sector expanded for the third consecutive month in October, driven by a surge in new orders - their highest levels since March - and a substantial rise in sales, which significantly boosted business activity.

The Riyad Bank Purchasing Managers’ Index (PMI) increased from 56.3 in September to 56.9 in October, reflecting improved operating conditions and economic momentum. This growth was attributed to robust sales in October, as companies reported strong customer demand and overall favorable economic conditions.

Consequently, businesses experienced an expansion in commercial activity and maintained a positive outlook for future growth. Additionally, purchasing of production inputs accelerated after reaching a three-year low in September, though it remained moderate compared to early-year levels, with companies noting sufficient inventory levels.

The report highlighted, however, that the strong sector-wide improvement was accompanied by increased cost pressures in materials and staffing, resulting in the first rise in average prices for goods and services in four months.

Dr. Naif Al-Ghaith, Chief Economist at Riyad Bank, told Asharq Al-Awsat that the robust economic performance was driven by a notable rise in sales, contributing to expansions in employment, procurement, and inventory.

The accelerated pace of input purchases in September, the fastest in three years, reflects a continued expansionary trend since September 2020, driven by rising demand, he stressed

The significant increase in new orders in October underscores the success of Vision 2030’s strategic emphasis on innovation and infrastructure development, he added.

More than 40% of surveyed companies reported increased demand, driven by strong local customer interest, creative marketing strategies, and sustained investments in infrastructure, demonstrating the resilience of Saudi Arabia’s economy and reinforcing its position as a leading non-oil economy in the region.

He noted that these gains align with the non-oil GDP growth rate of 4.2% in the third quarter, indicating a positive economic shift as the country seeks to diversify income sources away from oil, contributing to Vision 2030’s goals of building a sustainable economy capable of meeting future challenges.

Al-Ghaith projected that the non-oil sector’s contribution to GDP would exceed 52%, with growth surpassing 4% this year.



Many in Egypt Struggle as the Costs of a Distant War Drive up Prices in Local Markets

Cars are seen on a road at Nasr City, a suburb of Cairo, Egypt May 3, 2021. REUTERS/Mohamed Abd El Ghany
Cars are seen on a road at Nasr City, a suburb of Cairo, Egypt May 3, 2021. REUTERS/Mohamed Abd El Ghany
TT

Many in Egypt Struggle as the Costs of a Distant War Drive up Prices in Local Markets

Cars are seen on a road at Nasr City, a suburb of Cairo, Egypt May 3, 2021. REUTERS/Mohamed Abd El Ghany
Cars are seen on a road at Nasr City, a suburb of Cairo, Egypt May 3, 2021. REUTERS/Mohamed Abd El Ghany

Sayyed Ragheb was already struggling to keep his family afloat, earning less than $100 a month. Now he fears it will get even worse after Egypt hiked fuel prices because of the Iran war.

The father of four school-age children works day-to-day in cafes and sometimes in construction. With prices of meat and produce jumping just the past week, he worries about meeting his family’s basic needs, The AP news reported.

“This means a price increase for everything,” said Ragheb, as he served hot drinks at a cafe on a recent evening in Cairo. “This is catastrophic for someone like me.”

Egypt is one of the few countries in the Middle East not directly affected by the war, now in its third week with no sign of abating. It’s not part of the US-Israeli campaign against Iran, and it hasn’t been targeted by Iranian missile and drone fire, like Arab Gulf nations, or by Israeli bombardment, like Lebanon.

But the nation of over 108 million people is feeling the conflict’s repercussions. Soaring energy prices forced the government to implement a steep hike in the prices of subsidized fuel and cooking gas.

That is having a domino effect on the prices of other goods and services in Egypt's struggling economy. Moreover, it comes during the Muslim holy month of Ramadan, when families traditionally hold large dinner gatherings, and ahead of the holiday of Eid al-Fitr, a major shopping season when people buy new clothes, especially for children.

Egypt is vulnerable to fuel price hikes World energy prices have surged since the US and Israel launched the war on Feb. 28. Iran retaliated by attacking oil and gas infrastructure across the Persian Gulf and effectively blocking traffic through the Strait of Hormuz, where a fifth of the world's traded oil passes.

Brent crude, the international benchmark, soared from less than $70 a barrel on Feb. 27 to a peak of nearly $120 early March 9. It was hovering around $104 on Wednesday.

The jump is particularly painful for Egypt because the government dedicates a large part of its already strained budget to subsidizing gasoline, fuel and electricity.

Energy prices aren’t its only vulnerability.

Traffic through the Suez Canal, a major source of government income, had started to recover after two years of attacks on Red Sea shipping by Yemen's Houthis. Now some shipping companies are again routing traffic away from the Middle East because of the latest turmoil, and the government says it expects more losses.

Egypt, home to the ancient pyramids, also earns considerable foreign income from tourism. But arrivals are expected to plunge as travelers steer clear of the region.

If the conflict is prolonged and continues to drive up prices and reduce government revenues, the short-term economic pain could become a broader political and economic crisis, said Alexandra Blackman, an expert in Mideast politics at Cornell University.

“That will be more challenging for the regime to manage and control,” she said.

Egypt's president says the price hikes were ‘inevitable’ On March 10, the government announced a 15% hike in the price of gasoline, a 22% hike in cooking gas and a 17% hike in diesel, widely used in commercial and public transport.

President Abdel-Fattah el-Sissi acknowledged the pressure on people but said the increases are “inevitable” and “the least expensive” option to protect the economy.

“The requirements of the reality sometimes necessitate taking difficult measures ... to avert harsher options and more serious consequences,” he said over the weekend at an Iftar event, breaking the daily sunrise-to-sunset Ramadan fast.

He said Egypt’s consumption of oil products costs $20 billion annually, including fuel used to operate power plants.

The government imports 28% of its gasoline needs and 45% of its diesel needs, which puts pressure on the budget, said Petroleum Minister Karim Badawy.

The government announced a series of measures aimed at mitigating the impact, including reducing official overseas trips and tightening fuel consumption across the public sector. It also announced salary increases starting in July.

Egypt’s poor and middle class have already seen their purchasing power shrink over the past decade under government austerity measures. The measures included the slashing of subsidies and devaluation of Egypt’s currency as part of an ambitious reform program in 2016.

Inflation jumped from 10% in January to 11.5% in February of this year, according to official figures. The price increases are rippling across the economy in a country where a third of the population is below the poverty line, according to government statistics.

Since the new fuel prices took effect, the cost of meat has jumped 25% and fruit and vegetables rose 15-30%, according to merchants at three markets in Cairo.

Hussein Rashad, a grocer in a poorer district, said customers have become more selective, and most have reduced the amount of vegetables they buy. Some have stopped buying fruit altogether, he said.

“Many things have become out of their reach,” he said.

Ragheb, the cafe worker, said his family has tightened its budget, including resorting to the cheapest food staples. He won't be buying new clothes for his children for the upcoming Eid.

“One has no other option,” he said.


Gold Falls 2% as Inflation Fears Bolster Hawkish Fed Bets

Gold bars after being inspected and polished at a refinery in Sydney (AFP)
Gold bars after being inspected and polished at a refinery in Sydney (AFP)
TT

Gold Falls 2% as Inflation Fears Bolster Hawkish Fed Bets

Gold bars after being inspected and polished at a refinery in Sydney (AFP)
Gold bars after being inspected and polished at a refinery in Sydney (AFP)

Gold prices fell to a one-month low on Wednesday as investors weighed the risk of a more hawkish US Federal Reserve policy stance, with high oil prices fuelling concerns about inflation.

Spot gold fell 2% to $4,903.19 per ounce as of 1216 GMT, its lowest level since February 18. US gold futures for April delivery also dropped 2% to $4,907.40, according to Reuters.

"Investors are worried about rates staying 'higher-for-longer' due to elevated energy prices ... the longer the Iran conflict goes on, the more likely that scenario," said Jamie Dutta, market analyst at Nemo.money.

While gold is viewed as a hedge against inflation and uncertainty, high interest rates curb its appeal by raising the cost of holding bullion and boosting returns on yield-bearing assets.
The Middle East conflict, in its third week, saw Iran target Tel Aviv with missiles in retaliation for Israel's assassination of its security chief, Ali Larijani, Iranian state television reported on Wednesday.

Benchmark Brent futures prices have been above $100 per barrel for the past four sessions.

Meanwhile, the Fed is widely expected to hold rates steady later in the day.

Investors will parse Fed Chair Jerome Powell's remarks to assess the central bank's policy view for the rest of 2026, with futures markets seeing only one quarter-percentage-point rate cut this year, in September, and another cut in late 2027.

"Long-term drivers like central bank buying, stagflation risks and diversification demand remain. That should mean higher (gold) prices by end of 2026," Dutta said.

Spot silver fell 1.2% to $78.29 per ounce, spot platinum was down 2.9% at $2,063.69, and palladium lost 2.6% to $1,560.50.


UAE Bank Stocks Jump after Central Bank Launches Resilience Package

A man on a boat with an UAE flag near Dubai Creek, in Dubai, United Arab Emirates, March 5, 2026. Picture taken with a mobile phone. REUTERS/Rula Rouhana
A man on a boat with an UAE flag near Dubai Creek, in Dubai, United Arab Emirates, March 5, 2026. Picture taken with a mobile phone. REUTERS/Rula Rouhana
TT

UAE Bank Stocks Jump after Central Bank Launches Resilience Package

A man on a boat with an UAE flag near Dubai Creek, in Dubai, United Arab Emirates, March 5, 2026. Picture taken with a mobile phone. REUTERS/Rula Rouhana
A man on a boat with an UAE flag near Dubai Creek, in Dubai, United Arab Emirates, March 5, 2026. Picture taken with a mobile phone. REUTERS/Rula Rouhana

The United Arab Emirates central bank (CBUAE) on Tuesday unveiled a package to help bolster banks' liquidity, marking its most significant policy move since the pandemic, as Gulf economies move to weather the impact of the Iran crisis.

UAE banks, whose stocks have seen double-digit losses since the war began last month, jumped on Wednesday morning, with Dubai's Emirates NBD and Abu Dhabi Islamic Bank gaining over 6%, and Abu Dhabi Commercial Bank up over 5%.

First Abu Dhabi Bank was losing around 1% by 0825 GMT.

The war, now in its third week and without tan end in sight, has thrown global energy markets and transport into chaos as the conflict has spread.

The UAE's financial system "has demonstrated resilience during the current extraordinary circumstances affecting the global and regional markets without any material impact on the banking sector's health and payment systems," the CBUAE board said in a statement.

Under the package approved on Tuesday, banks will gain enhanced access to ⁠reserve balances of up to 30% of the cash reserve requirement and term liquidity facilities in both UAE dirhams and US dollars, the CBUAE said.

Other measures include stopgap relief in liquidity and stable funding ratios as well as the temporary release of the countercyclical capital buffer (CCyB) and capital conservation buffer (CCB), it said.

While the measures introduced on Tuesday are larger than a similar package introduced to withstand the impact of the COVID-19 pandemic, "asset quality pressures could still emerge should the conflict persist and its economic effects deepen," the bank said.

Gulf banks could face domestic deposit outflows of $307 billion if the Middle East conflict deepens, S&P Global Ratings said in a report on Monday. The ratings agency said, however, that it had seen no evidence of major outflows of foreign or local funding from banks.

The CBUAE said in Tuesday's statement that the overall stock of liquidity held by UAE banks at the regulator, combined with their net eligible assets for central bank operations, had reached close to $250 billion, of which banks' reserve balances exceed $109 billion.