Saudi Arabia in 2024: Positive Expectations Underpinned by Political Will and Economic Capacities

Saudi Crown Prince Mohammed bin Salman and the South Korean President attend a session of the Future Investment Initiative (SPA)
Saudi Crown Prince Mohammed bin Salman and the South Korean President attend a session of the Future Investment Initiative (SPA)
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Saudi Arabia in 2024: Positive Expectations Underpinned by Political Will and Economic Capacities

Saudi Crown Prince Mohammed bin Salman and the South Korean President attend a session of the Future Investment Initiative (SPA)
Saudi Crown Prince Mohammed bin Salman and the South Korean President attend a session of the Future Investment Initiative (SPA)

In an increasingly uncertain world, constants remain our main reference for forecasting the near future. These constants, the factors upon which projections about the future are based, can be summarized into three factors: The first is political will, the primary determinant of the direction a state will take and the objectives it sets.

The second is economic capacity, which enables states to execute their political will and allows them to turn plans into tangible reality.

As for the third factor, it is global changes, which can either positively or negatively affect the implementation of these plans. This is the major cause for uncertainty regarding the future, and state policies play a crucial role in determining it. When applying this perspective to the Kingdom of Saudi Arabia, one can anticipate what the next year might look like.

Saudi Arabia 2023

Starting with political will, domestically, the Kingdom continues to pursue its ambitious Vision 2030 - a pursuit reinforced by the fact that it has achieved targets ahead of schedule. Many of these initiatives have certainly started to bear fruit, especially those that began early in restructuring some of the state's sectors.

The Kingdom did not stop at the programs it launched with the inception of its Vision. It pursued many projects and initiatives in sectors such as tourism, entertainment, and sports. In the latter, the implications of the state's determination to transform plans into reality are particularly evident. In just a few years, the Saudi football league has stolen the spotlight from globally followed football leagues, with the world turning its attention to the Kingdom after the sports sector was restricted and the role of the private sector in the sports system was invigorated.

Since the Vision is comprehensive and encompasses all vital sectors, the interconnections of its different projects and their mutual reinforcement of one another have become evident. For example, recognizing the need for logistical support in the tourism sector, the Public Investment Fund launched Riyadh Air to help the Kingdom reach tourism targets.

This principle of interconnectedness applies to many intersections within the Vision. The progress made in these various sectors is further enhanced by the direct oversight of the Kingdom's senior leadership over national strategies, which ensures the integration and staves off redundancies.

Political will in the Kingdom also has obvious implications for its foreign relations with other countries. For years, the Kingdom has built bridges of communication with the world under the banner of shared interests and the exchange of values. 2022 concluded with the visit of the Chinese President to Riyadh, and these high-level visits continued into 2023, with the Kingdom hosting several major summits, such as the Saudi-African Summit, the Gulf-ASEAN Summit, the Saudi-Caribbean Summit, the Arab Summit, and the Islamic Summit.

The objectives of these summits vary and include political, economic, and cultural aspects. However, the Kingdom takes the same approach to all countries with shared interests and mutual benefits.

The Kingdom also participated in global summits, notably the G20 Summit in India and the Summit for a New Financing Pact in Paris. The impact of these efforts and international visits became apparent when the Kingdom won the bid to host Expo 2030 by attaining the majority of votes from countries and leveraging its strong global relationships.

Economic capacity

The second factor is economic capacity, which may be represented by the state budget for the next year. The Kingdom has continued to expand spending, setting a budget of over 1.2 trillion Riyals, while making conservative revenue projections. The deficit in the state's general budget did not exceed 2 percent, and the government continues to spend on various sectors without making any significant changes, thereby ensuring the continuity of the state's strategies for these sectors and their alignment with the shifts all around us.

While oil revenues decreased due to OPEC's proactive policy to maintain market stability, non-oil revenues continued to increase, reaching 441 billion riyals - about 37 percent of the state's revenues, up from approximately 32.5 percent in 2018.

The Kingdom's capacity to keep up this spending reflects two things: first, it is confident that its economy is solid, and it can sustain this expansionary spending without increasing public debt relative to GDP or depleting its reserves; second, its commitment to pursuing the programs of Vision 2030 and its reassurance about their positive outcomes for the national economy.

Global changes

The third factor is global changes, which can either pose risks or create opportunities for the Kingdom. These changes could be geopolitical, such as the ongoing Russian-Ukrainian war, which affects the stability of oil prices, or changes in the course of Israel’s assault on Gaza, which impacts the entire region, or the Houthi attacks disrupting maritime navigation in the Red Sea.

These changes may also be reflected in the global economy. Global economic growth remains slow due to factors such as inflation, the austere monetary policies adopted by central banks to curb it, and the aftermath of the pandemic, which has had an impact on global supply chains.

Saudi Arabia 2024

The forecasts for the Saudi economy in the next year are generally positive. Fitch predicted that the Saudi economy would grow between 2.6 and 3.3 percent, while Moody's expects growth of around 4.6 percent. The International Monetary Fund (IMF) raised its growth projections for the Kingdom to 4 percent in a short period. The preliminary budget statement from the Ministry of Finance has said that real GDP is expected to grow by 4.4 percent.

These forecasts are driven by several factors, including the events of 2023 and the policies being pursued by the Kingdom. Despite reducing its oil production, the Kingdom's revenues increased this year. This increase was driven by rising non-oil revenues, and these revenues are expected to continue to rise next year, as they have over the past five years.

This increase is due to the increasing role of the private sector, which has been invigorated by various government measures and programs tied to Vision 2030. This approach taken by the Saudi government is to mitigate potential risks in global oil markets. That is among the major axes of Vision 2030, which aims to diversify revenue sources in order to ensure sustainable growth and development in the Kingdom.

The developments seen in 2023 reflect a number of projections. For example, it would not be surprising if Saudi Arabia launched several projects related to its hosting of Expo 2030. These could include determining the location of the event, holding activities such as conferences tied to the Expo, like exhibitions, and strategic plans, and possibly establishing a governmental body tasked with overseeing this major event.

Moreover, we can also expect changes in the Saudi sports sector next year. Given that Saudi Arabia began privatizing clubs by transferring the ownership of four clubs to the Public Investment Fund, this trend could continue next year, with more clubs being transferred to major Saudi companies.

An increase in pace at the Ministry of Sports can also be anticipated in preparation for the expected announcement of its successful bid to host the 2034 FIFA World Cup. This preparation might involve submitting a proposal that includes constructing new stadiums and infrastructure to ensure that the Kingdom provides fans with a distinguished experience and that the sports sector meets the high aspirations that have been set for it.

With Saudi Arabia hosting Expo 2030 and the 2034 World Cup, many infrastructure projects are anticipated. These include ongoing large-scale infrastructure projects in Riyadh, such as King Salman Airport, the Qiddiya Project, King Salman Park, and other significant initiatives. Other cities in the Kingdom that may play an important role, especially in organizing the World Cup, are also expected to see major projects.

Those following the progress being made on Vision 2030 projects can see that it started with several ambitious projects like NEOM, Red Sea, Amaala, and Qiddiya. It began with the launch of numerous projects in Riyadh at the start of Vision 2030, and then we saw other projects in other cities, such as Jeddah Central, Rua Al Medina, and the Sudah and Abha Airport projects.

This might indicate that more projects will be seen in other cities across the Kingdom, whether broad infrastructure projects or sight-specific ones, like agricultural projects suited to cities and their geography and environment. This means that the next year will see the persistence, God willing, of Vision 2030, and the expansion of its initiatives to more Saudi cities that align with their cultural and geographical characteristics.

Flexibility of the Kingdom

The Kingdom has shown itself to be flexible through how it has dealt with economic and political events in recent years. It was not significantly affected by the inflation generated by the pandemic, unlike other countries, and it managed to stave off the negative repercussions of global geopolitical conflicts. Rather, it launched global initiatives aimed at addressing the ramifications of these developments, as it had with its initiatives for global supply chains.

It is not surprising that this approach will continue next year, with precautions being taken to avoid any changes that could negatively impact its economic and strategic interests. The Kingdom will leverage the robustness of its economy and global relationships to find solutions that ensure prosperity, all while maintaining its national project aimed at elevating its strategic and vital sectors.



Trump's Week of Tariff Turmoil Rings Recession Alarm

An electronic board shows Shanghai and Shenzhen stock indices as people walk on a pedestrian bridge at the Lujiazui financial district in Shanghai, China April 11, 2025. REUTERS/Go Nakamura  REFILE - QUALITY REPEAT
An electronic board shows Shanghai and Shenzhen stock indices as people walk on a pedestrian bridge at the Lujiazui financial district in Shanghai, China April 11, 2025. REUTERS/Go Nakamura REFILE - QUALITY REPEAT
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Trump's Week of Tariff Turmoil Rings Recession Alarm

An electronic board shows Shanghai and Shenzhen stock indices as people walk on a pedestrian bridge at the Lujiazui financial district in Shanghai, China April 11, 2025. REUTERS/Go Nakamura  REFILE - QUALITY REPEAT
An electronic board shows Shanghai and Shenzhen stock indices as people walk on a pedestrian bridge at the Lujiazui financial district in Shanghai, China April 11, 2025. REUTERS/Go Nakamura REFILE - QUALITY REPEAT

A week of turbulence unleashed by US President Donald Trump's tariffs showed little sign of easing on Friday, with financial markets again whipsawing and foreign leaders grappling with how to respond to a dismantling of the world trade order.

A brief reprieve for battered stocks seen after Trump decided to pause duties for dozens of countries for 90 days quickly dissipated, as attention returned to his escalating trade war with China that has fueled global recession fears.

US Treasury Secretary Scott Bessent tried to assuage sceptics by telling a cabinet meeting on Thursday that more than 75 countries wanted to start trade negotiations. Trump himself expressed hope of a deal with China, the world's No.2 economy.

But the uncertainty in the meantime extended some of the most volatile trading since the early days of the COVID-19 pandemic.

The S&P 500 index ended 3.5% lower on Thursday and is now down about 15% from its all-time peak in February.

Asian indices mostly followed Wall Street lower on Friday with Japan's Nikkei down 4%, though markets in Taiwan and Hong Kong turned positive and European stocks were set to open slightly firmer.

A sell-off in government bonds - which caught Trump's attention before Wednesday's pause - picked up pace on Friday with US long-term borrowing costs set for their biggest weekly increase since 1982. Gold, a safe haven for investors in times of crisis, scaled a record high.

"Recession risk is much, much higher now than it was a couple weeks ago," said Adam Hetts, global head of multi-asset at investment fund Janus Henderson.

Bessent on Thursday shrugged off the renewed market turmoil and said striking deals with other countries would bring certainty.

The US and Vietnam have agreed to begin formal trade talks, the White House said. The Southeast Asian manufacturing hub is prepared to crack down on Chinese goods being shipped to the United States via its territory in the hope of avoiding tariffs, Reuters exclusively reported on Friday.

Japanese Prime Minister Shigeru Ishiba, meanwhile, has set up a trade task force that hopes to visit Washington next week. Taiwan said it also expects to be included in the first batch of trading partners to hold talks with Washington.

CHINA DEAL?

As Trump suddenly paused his 'reciprocal' tariffs on other countries hours after they came into effect earlier this week, he ratcheted up duties on Chinese imports as punishment for Beijing's initial move to retaliate.

Trump has now imposed new tariffs on Chinese goods of 145% since taking office, a White House official said.

Chinese officials have been canvassing other trading partners about how to deal with the US tariffs, most recently talking to counterparts in Spain, Saudi Arabia and South Africa.

Trump told reporters at the White House he thought the United States could make a deal with China, but he reiterated his argument that Beijing had "really taken advantage" of the US for a long time.

"I'm sure that we'll be able to get along very well," Trump said, adding that he respected Chinese President Xi Jinping. "In a true sense he's been a friend of mine for a long period of time, and I think that we'll end up working out something that's very good for both countries."

China, which has rejected what it called threats and blackmail from Washington, restricted imports of Hollywood films, targeting one of the most high-profile American exports.

The US tariff pause also does not apply to duties paid by Canada and Mexico, whose goods are still subject to 25% fentanyl-related tariffs unless they comply with the US-Mexico-Canada trade agreement's rules of origin.

With trade hostilities persisting among the top three US trade partners, Goldman Sachs estimates the probability of a recession at 45%.

Even with the rollback, the overall average import duty rate imposed by the US is the highest in more than a century, according to Yale University researchers.

The pause also did little to soothe business leaders' worries about the fallout from Trump's trade war and its chaotic implementation: soaring costs, falling orders and snarled supply chains.

One reprieve came, however, when the European Union said on Thursday it would pause its first counter-tariffs.

The EU had been due to launch counter-tariffs on about 21 billion euros ($23 billion) of US imports next Tuesday in response to Trump's 25% tariffs on steel and aluminium. It is still assessing how to respond to US car tariffs and the broader 10% levies that remain in place.

Finance ministers from the 27-country bloc will brainstorm on Friday how to use the pause to get a trade deal with Washington and how to coordinate their efforts to handle tariffs if they do not.

European authorities estimate the impact of the US tariffs its economy would total 0.5% to 1.0% of GDP. Given the EU economy as a whole is forecast to grow 0.9% this year, according to the European Central Bank, the US tariffs could tip the EU into recession.