Saudi Arabia Builds its Own Digital Sovereignty Model

A woman stands in front of an information screen at the LEAP tech exhibition in Saudi Arabia (SPA)
A woman stands in front of an information screen at the LEAP tech exhibition in Saudi Arabia (SPA)
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Saudi Arabia Builds its Own Digital Sovereignty Model

A woman stands in front of an information screen at the LEAP tech exhibition in Saudi Arabia (SPA)
A woman stands in front of an information screen at the LEAP tech exhibition in Saudi Arabia (SPA)

In a world where digital borders are blurring and countries are racing to control data and build technological power, Saudi Arabia has chosen to carve out its own digital path.

Through an ambitious strategic vision, the Kingdom has launched a network of policies, investments, and high-value partnerships that have turned it into a global model for digital transformation. It ranked first in the International Telecommunication Union’s 2025 Digital Readiness Framework, scoring 94 out of 100.

But the score tells only part of the story. More important is what it signals, a deep shift in how Saudi Arabia views digital sovereignty. It is no longer just a shield for protecting data. It has become a driver of growth and a tool for shaping the future.

To understand that shift, the concept itself must be redefined.

Ayman AlRashed, IBM’s regional vice president in Saudi Arabia, says digital sovereignty is often wrongly reduced to a technical question of where data is stored.

“It is important to look at digital sovereignty as an integrated operational capability,” AlRashed told Asharq Al-Awsat.

He said it covers an organization’s ability to control and govern its data, operate its digital systems, and manage outcomes with confidence and continuity over the long term.

That broader definition gives digital sovereignty a far deeper meaning. It is not a wall built to stop data from leaving. It is a full governance system that ensures accountability, access controls, oversight and auditability, while preserving the reliability of digital systems and their ability to scale securely and in compliance with regulations.

Mohamed Talaat, vice president for Saudi Arabia, Egypt, North Africa and the Levant at Dell Technologies, said the Kingdom has translated that approach into practical policy through clear regulatory frameworks, led by the Personal Data Protection Law.

He told Asharq Al-Awsat that the law helped create an environment that supports global expansion while maintaining strict control over data.

Saudi Arabia has also made itself more attractive to international technology companies through economic zones, tax incentives, and partnerships with cloud service providers.

How fintech flourished

The fintech sector offers one of the clearest examples of how digital sovereignty is reshaping the Saudi economy.

The sector has expanded sharply in recent years. AlRashed says digital sovereignty was one of the main factors behind that growth.

The reason is straightforward. Once sensitive financial data could be processed and stored inside the Kingdom under local regulatory frameworks, investors, banks, insurers and end users became more confident in fintech solutions.

Digital sovereignty removed one of the biggest barriers to growth, concern over where sensitive data sits and who controls it.

Crucially, that did not come at the expense of innovation. IBM provided sovereign and hybrid cloud solutions that allow financial institutions to keep sensitive data locally while still using advanced cloud capabilities.

That model gave fintech firms a practical way to balance fast innovation with strict regulatory compliance, without sacrificing either.

From compliance to expansion

Digital sovereignty has not only helped large institutions. It has also changed the equation for Saudi startups.

AlRashed says that storing and processing data within the Kingdom under clear regulatory frameworks has enabled startups to launch and grow while remaining compliant from day one.

But the economic impact goes beyond easier compliance. Digital sovereignty has strengthened trust among customers and partners in local solutions. That has helped speed up the adoption of digital products, expand customer bases, improve access to investment, build partnerships with major institutions, and increase the likelihood of early revenue.

AlRashed says the deeper impact lies in preparing startups for regional expansion.

By building digital solutions on strong, sovereign standards within the Kingdom, Saudi companies have gained a clear competitive edge, especially as regulatory policies across several regional markets converge. What they built locally has become easier to export and scale.

A delicate balance

One of the toughest questions is how Saudi Arabia managed to attract major global technology firms to invest locally without giving up control over national data.

Talaat says the Kingdom struck a careful balance. It offered international companies a clean regulatory environment and attractive incentives, while imposing strict guarantees to keep sensitive data under national control.

He said this approach has taken practical form in a secure local infrastructure that supports national artificial intelligence agendas.

One example is Dell Technologies’ opening in 2024 of a new merger and distribution center in Dammam, part of a multimillion-dollar investment to strengthen local operations and supply chain resilience.

The move reflects a model in which global companies become partners in building sovereignty, not threats to it.

A regional digital hub

What will this ecosystem look like by 2030?

Talaat sketches an ambitious picture, a sovereign digital economy expected to be the largest in the Middle East, with artificial intelligence alone forecast to contribute $135 billion to the economy and local data center capacity exceeding 1.5 gigawatts.

Saudi Arabia is working to cement its position as a global hub for cloud computing, artificial intelligence innovation and sustainable technology manufacturing, supported by integrated smart cities and secure sovereign data systems.

AlRashed says the Kingdom has a real chance to move beyond the domestic arena and help shape global models for digital sovereignty through a growing network of local, regional and international partnerships.

That marks a shift from importing technology to exporting models and standards.

Still, both men acknowledge that the vision faces a central challenge, closing human skills gaps.

Advanced infrastructure is essential, but it is not enough. Saudi Arabia also needs deep, parallel investment in developing national talent capable of managing and leading its digital future.

In the end, Saudi Arabia’s experience shows that digital sovereignty is not a defensive strategy designed to cut data off from the world. It is a way for countries and companies to engage with global innovation from a position of strength, not dependence.



IMF Cuts 2026 Euro Zone Growth Forecast with Higher Inflation

FILE PHOTO: Dark clouds are seen over the building of the European Central Bank (ECB) in Frankfurt, Germany, June 6, 2024. REUTERS/Wolfgang Rattay/File Photo
FILE PHOTO: Dark clouds are seen over the building of the European Central Bank (ECB) in Frankfurt, Germany, June 6, 2024. REUTERS/Wolfgang Rattay/File Photo
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IMF Cuts 2026 Euro Zone Growth Forecast with Higher Inflation

FILE PHOTO: Dark clouds are seen over the building of the European Central Bank (ECB) in Frankfurt, Germany, June 6, 2024. REUTERS/Wolfgang Rattay/File Photo
FILE PHOTO: Dark clouds are seen over the building of the European Central Bank (ECB) in Frankfurt, Germany, June 6, 2024. REUTERS/Wolfgang Rattay/File Photo

The International Monetary Fund cut its growth forecast for the euro zone on Thursday and raised its expectation for inflation because of the US-Israeli war on Iran, adding that the economic situation could worsen if high energy prices persisted.

In its regular report on the economy of the 21 countries that share the euro currency, the IMF said economic growth this year would be 0.9%, down from ⁠1.1% forecast in ⁠April while inflation would be 2.8%, up from 2.6% forecast in April.

The IMF's had already revised down its euro zone growth forecast in April from its January prediction.

"Following a period of growth at potential and inflation on target, the euro area outlook has weakened," the IMF said in a report presented to ⁠euro zone finance ministers, referring to the war in the Middle East as a "large but temporary adverse supply shock."

"An even more persistent energy shock could raise inflation and inflation expectations further, even as a drop in confidence or financial stress could weaken demand. A resurgence of the conflict in the Middle East or delays in repairing energy infrastructure, intensified hostilities in Ukraine, and further trade policy adjustments pose additional downside risks," Reuters quoted it as saying.

The IMF said the European Central Bank, which earlier on Thursday raised interest rates for ⁠the first ⁠time in nearly three years, was likely to raise rates again for a cumulative 50 basis points increase in 2026, with a third rate rise also possible.

The IMF warned euro zone finance ministers against rushing to cushion their economies against the impact of high energy costs. "Broad-based fiscal support is not warranted," it said.

Many euro zone members had already introduced measures, averaging around 0.1 percent of GDP across the EU on a GDP-weighted basis as of May 2026.

It said, despite their limited scale so far, the measures likely blunted incentives for energy conservation and that future measures should targeted more to protect vulnerable households.


Egypt Signs Deal to Transfer Shares in Wataniya 172 Fuel Stations to Taqa Arabia

Egyptian Prime Minister Mostafa Madbouly. Reuters file photo
Egyptian Prime Minister Mostafa Madbouly. Reuters file photo
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Egypt Signs Deal to Transfer Shares in Wataniya 172 Fuel Stations to Taqa Arabia

Egyptian Prime Minister Mostafa Madbouly. Reuters file photo
Egyptian Prime Minister Mostafa Madbouly. Reuters file photo

Egypt signed an agreement on Thursday with Taqa Arabia to transfer ownership of a stake in 172 state-owned Wataniya fuel stations through a newly established company, Quick Fuel, according to a ⁠cabinet statement.

Under the ⁠agreement, Taqa Arabia will acquire a 10% stake in Quick Fuel and will also have ⁠the option to acquire an additional 15% stake when the company is listed on the Egyptian stock exchange, Reuters reported.

Egypt said last year it would offer stakes in military-owned companies, which included Wataniya Petroleum, through ⁠its ⁠sovereign wealth fund.

The IMF has made increasing the role of the private sector in the economy a requirement for Egypt's $8 billion loan program.


Hormuz Shock Hits Gulf Economies, Saudi Arabia Takes Center Stage in 2026

 In this picture obtained from Iran's ISNA news agency on June 8, 2026, residents take a dip as cargo and commercial vessels lie at anchor in the Strait of Hormuz off Bandar Abbas. (Photo by Amirhossein KHORGOOEI / ISNA / AFP) /
In this picture obtained from Iran's ISNA news agency on June 8, 2026, residents take a dip as cargo and commercial vessels lie at anchor in the Strait of Hormuz off Bandar Abbas. (Photo by Amirhossein KHORGOOEI / ISNA / AFP) /
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Hormuz Shock Hits Gulf Economies, Saudi Arabia Takes Center Stage in 2026

 In this picture obtained from Iran's ISNA news agency on June 8, 2026, residents take a dip as cargo and commercial vessels lie at anchor in the Strait of Hormuz off Bandar Abbas. (Photo by Amirhossein KHORGOOEI / ISNA / AFP) /
In this picture obtained from Iran's ISNA news agency on June 8, 2026, residents take a dip as cargo and commercial vessels lie at anchor in the Strait of Hormuz off Bandar Abbas. (Photo by Amirhossein KHORGOOEI / ISNA / AFP) /

The global economy is entering an extremely sensitive phase in 2026 amid escalating geopolitical tensions in the Middle East, which have cast a heavy shadow over the fragile global recovery and reshaped the global credit and financial landscape.

At the heart of these turbulent developments, Gulf Cooperation Council economies find themselves directly confronting the fallout from disruptions in energy markets and supply chains resulting from the effective closure of the Strait of Hormuz, according to the World Bank. While this shock has placed the region’s growth under severe pressure, pushing overall growth rates toward near-zero levels, Saudi Arabia has emerged as the strongest expected economic performer among its neighbors, supported by financial buffers and flexible logistical capabilities that have strengthened its ability to contain the impact of the current crisis.

According to the World Bank Group’s June Global Economic Prospects report, rising inflationary pressures, higher energy prices, and tighter monetary policies are driving global growth to lower levels. These combined factors have led the bank to lower its global growth forecast for 2026 to 2.5 percent, compared with about 2.9 percent in 2025, marking a path below its previous January forecast of 2.6 percent.

The crisis has placed two-thirds of the world’s economies under downward revisions, amid stark warnings of a darker global economic scenario known as “fuel and financing stress,” which could push growth down to 1.3 percent if supply disruptions worsen and are accompanied by acute financial pressures. Estimates point to a partial recovery in 2027 to 2.8 percent, although that would remain below the average of the previous decade.

King Fahd Industrial Port in Yanbu, Saudi Arabia (SPA)

Energy Markets, Inflation, and the Impact of Hormuz

Energy markets are at the center of the crisis, having been directly affected by geopolitical developments, particularly the closure of the Strait of Hormuz, which has led to severe disruptions in global supplies.

The World Bank expects Brent crude to average about $94 per barrel in 2026, representing an increase of roughly 36 percent compared with 2025, provided disruptions subside by July.

The repercussions are not limited to oil. Fertilizer prices are also expected to rise, increasing pressure on global food prices and pushing global inflation to around 4 percent, compared with 3.3 percent in 2025, with the possibility of reaching 4.4 percent under the worst-case scenario.

Gulf and Middle East Economies on the Front Line

Saudi Arabia’s economic leadership in the latest June update was not unexpected. Figures published in the World Bank’s April report indicate that the Kingdom has not only succeeded in building solid “economic buffers” but has also turned current geopolitical challenges into an opportunity to accelerate structural adjustment, reflected in growth of 3.1 percent.

The updated estimates and figures released today reinforce that outlook and underscore this structural advantage. The World Bank revealed figures reflecting the depth of the regional shock as follows:

  • Middle East and North Africa growth declines: The bank expects overall growth in the region to fall sharply (excluding Iran due to exceptional uncertainty) to just 1.6 percent in 2026, compared with about 4 percent in 2025, representing a severe downward revision of 2.7 percentage points from last January’s forecast.
     
  • Near paralysis across Gulf and regional economies: Perhaps the bleakest indicator in the June report is the decline in overall growth among oil-exporting economies in the Middle East to just 0.3 percent in 2026, a downward revision of 4.3 percentage points from January’s forecast. This reflects disruptions to production and export lines. The figure marks a significant deepening of the shock compared with the bank’s April report, which had lowered regional growth forecasts at the time to 1.3 percent from an earlier projection of 4.4 percent. Current estimates show Gulf economies collectively slowing from 3.9 percent growth in 2025 to levels that constrain economic activity and approach zero in 2026, before rebounding toward recovery at around 5 percent in 2027 and 2028, driven by a recovery in trade flows and the launch of reconstruction projects.

Vessels are anchored in the Strait of Hormuz, as seen from Musandam, Oman, June 10, 2026. REUTERS/Stringer

The Geopolitical Structure Behind Diverging Performance

The World Bank attributed the sharp divergence in performance among Middle Eastern oil exporters to varying degrees of exposure to military activity and differences in policy buffers. The report noted that the slowdown would be less severe in Saudi Arabia due to its strategic ability to reroute oil exports away from logistical disruption through the East-West Pipeline leading to the Red Sea.

In a related context, the bank expects a more moderating slowdown in Oman, as it faces lower direct risks because its main ports lie outside the closed Strait of Hormuz. By contrast, the report links the sharp contraction in the economies of Kuwait, Qatar, and Iraq to a forced decline in oil production resulting from damage to energy infrastructure and the suspension of shipping through the strait, alongside surging shipping costs and rising defense and military spending pressures on government budgets.

Performance Across Gulf States

The updated estimates reinforce the figures anticipated by the World Bank in its April report regarding the performance gap among countries in the region as follows:

  • Saudi Arabia: Despite the World Bank deepening its downward revisions for the region as a whole in June to 1.6 percent due to the Hormuz shock, the Kingdom maintained its position as the region’s top performer. Growth is expected to reach 3.1 percent in 2026, down 1.2 percentage points from January estimates because of energy market conditions, before rebounding strongly to 4.9 percent in 2027.
     
  • United Arab Emirates: Growth expectations have been revised down by 2.7 percentage points since January. Growth is now expected to slow from 5 percent in 2025 to 2.4 percent in 2026, before rising again to 4.1 percent in 2027.
     
  • Qatar: Growth expectations for the Qatari economy have fallen sharply by 11.0 percentage points since January. The economy is now expected to contract by 5.7 percent, compared with previously projected positive growth of 5.3 percent, due to severe damage to liquefied natural gas supplies. Qatar is a key player in the global energy market, accounting for between 20 percent and 21 percent of global LNG supplies. The World Bank expects Qatari growth to rebound to 5.7 percent.
     
  • Kuwait: The economy is expected to contract by 6.4 percent, compared with a growth forecast of 2.6 percent in January. Kuwait relies entirely on the Strait of Hormuz to export its crude oil and petroleum products. The closure of the strait therefore means a complete shutdown of the country’s financial lifeline, immediately halting budget revenue inflows. The World Bank expects Kuwait’s economic growth to surge to 13.5 percent in 2027.
     
  • Bahrain: Growth expectations have been revised down by 1.8 percentage points since January. Growth is now expected to slow from 3.1 percent in 2025 to 1.3 percent in 2026 before rising again to 2.8 percent in 2027.
     
  • Oman: Growth expectations for Oman’s economy have been revised down by 1.2 percentage points since January. Growth is now expected to slow from 3.6 percent in 2025 to 2.4 percent in 2026 before increasing to 3 percent in 2027.

Perhaps the greatest shock lies in the freefall of the Iraqi economy, with growth expectations plunging from 6.5 percent to a steep contraction of 8.9 percent.

Egypt Defies the Downward Trend

In contrast to the sharp contraction affecting the budgets of oil-producing Gulf states, the World Bank raised its forecast for Egypt’s economic growth by 0.3 percentage points to 4.6 percent in 2026, before easing to 4 percent in 2027.

This relative recovery is attributed to Egypt’s logistical and geographic advantages, as a significant share of international trade and supply chains shifts toward alternative routes through the Red Sea and the Suez Canal to avoid disruption caused by the closure of the Strait of Hormuz. The diversity of Egypt’s economy and its lack of direct dependence on Gulf oil exports have also helped shield it from the immediate shock, alongside recent inflows of foreign direct investment and international support packages that have provided strong foreign-currency liquidity and enhanced the resilience of non-oil activity and domestic demand against geopolitical headwinds.

Diverging Outlooks

At the regional level, the data show varying performance across global regions. South Asia remains the fastest-growing region despite slowing to 6.3 percent, while growth in East Asia is projected at 4.2 percent and Sub-Saharan Africa at 4 percent.

Latin America is expected to grow by 2.2 percent, followed by Europe and Central Asia at 2.1 percent. Meanwhile, the Middle East and North Africa region is more heavily affected by the conflict, with growth slowing to 1.6 percent in 2026 before recovering to 5 percent in 2027.

Commenting on these difficult developments, World Bank Group President Ajay Banga said the greatest challenge facing governments today is achieving a careful balance between protecting current financial stability and preserving future growth opportunities.

Banga said the World Bank is working intensively to support affected countries through liquidity tools and emergency financing, while remaining fully prepared to provide additional support packages should the crisis worsen, with the aim of helping economies overcome the structural shock to energy markets and strengthen their capacity for sustainable recovery.