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KSA: Commercial Enterprises Turn Into Online Markets After Coronavirus

Coronavirus challenges impose the reality of shifting to e-stores in Saudi Arabia (Asharq Al-Awsat)
Coronavirus challenges impose the reality of shifting to e-stores in Saudi Arabia (Asharq Al-Awsat)
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KSA: Commercial Enterprises Turn Into Online Markets After Coronavirus

Coronavirus challenges impose the reality of shifting to e-stores in Saudi Arabia (Asharq Al-Awsat)
Coronavirus challenges impose the reality of shifting to e-stores in Saudi Arabia (Asharq Al-Awsat)

The rate of coronavirus infections in the Kingdom is gradually decreasing, while its economic impact, which some businessmen have described as “good,” is reflected in the shift to online shopping.

Large segments of consumers have resorted to online shopping during the lockdowns, in application to social distancing measures.

Several specialists in the Saudi market expected an increase in people’s interest in online shopping.

E-commerce specialist Afaf al-Askar told Asharq Al-Awsat that consumers in the Kingdom have resorted to e-commerce due to the coronavirus repercussions and the after-sales services that have seen a great development, especially by major commercial companies in the Saudi market.

She said the new developments have imposed a reality on after-sales services, stressing that they have become the main pillar on which e-commerce is based, and online shopping has become much easier for consumers.

Abdullah al-Bishri, one of the menswear merchants, said he suffered some losses since he wasn’t prepared to sell his goods online.

The Coronavirus has had a great impact on traditional trade, he stressed, noting that even before the crisis merchants noticed the increasing trend since 2019 for e-commerce in Saudi Arabia but thought it may not exceed 10 percent.

He also admitted an inaccurate reading of market trends by large segments of traders before the pandemic’s effects.

“Coronavirus has completely changed the trend as consumers now barely resort to traditional shopping,” he noted, adding that merchants must deal with the new trend as an existing reality and divert part of their sales towards e-commerce to meet consumers’ needs.

This development coincides with a study conducted by Visa Global Credit on the Saudi market.

It showed consumers’ increasing tendency to use digital payments compared to cash transactions.

According to the study, two-thirds of consumers in Saudi Arabia bought from online stores for the first time, indicating that 59 percent of them bought drugs from online pharmacies for the first time.

The study pointed out that 38 percent of the Kingdom’s merchants launched their websites as a direct result of the pandemic, while 57 percent already had e-commerce platforms before its outbreak.

Social Researcher Abdullah Marghalani, for his part, told Asharq Al-Awsat that people’s use of e-commerce in Saudi Arabia has social aspects.

It must be first acknowledged that the culture of e-commerce has increased significantly in the Kingdom over the past five years, even if the rate of people buying through traditional commerce was dominant at that time.

He stressed that resorting to online shopping was obligatory and imposed by the coronavirus outbreak.

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Business

Fitch Affirms Saudi Arabia at 'A+', Outlook Stable

A view of the Saudi capital, Riyadh. (SPA)
A view of the Saudi capital, Riyadh. (SPA)
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Fitch Affirms Saudi Arabia at 'A+', Outlook Stable

A view of the Saudi capital, Riyadh. (SPA)
A view of the Saudi capital, Riyadh. (SPA)

Fitch Ratings has affirmed Saudi Arabia's Long-Term Foreign-Currency Issuer Default Rating (IDR) at "A+" with a Stable Outlook, the agency said on Friday.

The rating reflects strong fiscal and external balance sheets, with government debt/GDP and sovereign net foreign assets (SNFA) considerably stronger than the "A" and "AA'" medians, and significant fiscal buffers in the form of deposits and other public sector assets, it added.

"Oil dependence and World Bank Governance Indicators (WBGI) have improved but remain weaknesses. Geopolitical risk is high, but the economy and public finances have been resilient to the US-Iran war," it stressed.

"Fitch forecasts real GDP growth will slow to 0.6% in 2026 due to disruption to trade caused by the closure of the Strait of Hormuz," it continued.

"Flows through the East-West pipeline supported oil production during the war and we expect output to be ramped up to meet external demand following the reopening of the Strait and to rebuild domestic stocks, but at an annual average of 9m b/d it will be below the 2025 level," it said.

"Non-oil growth will be hit by an inability to export petrochemicals during the closure of the Strait, but consumer spending held up and business confidence is recovering."

"Growth will rebound in 2027 as the normalization of flows through the Strait allows higher oil and petrochemicals production, before easing to 2.9% in 2028 The phased opening of gigaprojects (many of which have launched initial operations), the proximity of key events and guidance that the Public Investment Fund will keep domestic spending largely unchanged in its new five-year plan, will also support growth," Fitch noted.

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

"The fiscal deficit is projected to narrow in 2026 owing to higher oil revenues, as prices will offset lower volumes. Spending will also rise, reflecting the impact of the war, but much of the jump in 1Q was the precautionary frontloading of spending from later in the year," it said.

Fitch forecasts that lower oil revenues will widen the deficit to 4.7% in 2027, consistent with a fiscal breakeven oil price of USD94/b.

Spending is expected to decline in 2027, due to an easing of war-related pressures, lower capex and ongoing efforts to reduce rigidities in current spending. Expenditure adjustment will allow the deficit to narrow in 2028 despite a projected further fall in oil prices.

"Our fiscal projections are consistent with a further increase in debt/GDP, which we project at 41.3% at end-2028 (projected peer median of 58.1%), from 31.8% at end-2025. based on deposits remaining around 10% of GDP," said Fitch.

"Fitch forecasts a small current account surplus for 2026 due to higher oil export revenues. Lower oil prices and ongoing domestic demand growth that has a heavy component of imported goods, services and labor, will lead to a deficit of 5% of GDP by 2028. Current account deficits will be financed by external borrowing and the ongoing reorientation of public assets to domestic from foreign investments," it continued.

"Banks have been resilient to the war and did not require any support measures from the central bank," it stressed. "At end-1Q, non-performing loans were 1.1% and the Tier 1 capital ratio 19.2%, both improved from end-2024. Credit growth has slowed, particularly mortgages, in response to policy measures, and is being outpaced by deposit growth."

Fitch maintained its mid-year 2026 sector outlook for Saudi banks at "neutral".

Business

Renewed US-Iran Conflict Narrows Egypt’s Economic Growth Prospects

 A traditional market in Egypt’s Giza Governorate. (Asharq Al-Awsat) 
 A traditional market in Egypt’s Giza Governorate. (Asharq Al-Awsat) 
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Renewed US-Iran Conflict Narrows Egypt’s Economic Growth Prospects

 A traditional market in Egypt’s Giza Governorate. (Asharq Al-Awsat) 
 A traditional market in Egypt’s Giza Governorate. (Asharq Al-Awsat) 

The renewed US-Iran conflict in the Middle East is expected to further curb Egypt’s economic growth prospects as global oil prices are forecast to rise again, while several sectors of the economy continue to grapple with the effects of months of conflict, analysts say.

In its latest World Economic Outlook report released days ago, the International Monetary Fund (IMF) lowered its forecast for Egypt’s economic growth in fiscal year 2026-27 to 4.4 percent, down from the 4.8 percent projected in April. The IMF cited “the continuing impact of the Iran conflict — particularly the closure of the Strait of Hormuz — on the Middle East, weaker investment, higher financing costs, and persistent uncertainty.”

Economist Wael El-Nahas said the downgrade is “not limited to Egypt but reflects the global economy as a whole in light of the conflict’s repercussions,” describing the revision as both natural and expected.

Speaking to Asharq Al-Awsat, El-Nahas noted that the current period of skirmishes between the two sides could be viewed as a period of tacit understandings, allowing oil supplies to keep flowing while limiting sharp increases in food prices and other commodities. However, he warned that a renewed conflict would bring “a much worse period.”

Financial markets researcher Mohamed Mahdy Abdulnabi told Asharq Al-Awsat that geopolitical tensions are the main driver behind the weaker growth outlook.

He said Egypt faces several challenges under the current circumstances, including higher borrowing costs, greater reluctance among lenders to extend new financing, declining foreign investment, stagnation in the private sector, and continued losses at the Suez Canal.

President Abdel Fattah al-Sisi has previously estimated the canal’s losses at $10 billion, citing regional tensions and their impact on Red Sea shipping.

Abdulnabi warned that if the conflict persists, pressure on Egypt’s economy will intensify. “When global oil prices fell below $70 a barrel, the Egyptian government did not cut domestic fuel prices. But as soon as prices began rising again, discussion resumed over the automatic fuel pricing mechanism and the need to increase fuel prices,” he remarked.

The government raised fuel prices by between 14 and 30 percent last March, just 10 days after the US-Iran conflict erupted, amid rising energy import costs.

El-Nahas warned that global oil prices could climb above $100 a barrel, noting that Egypt’s current state budget is based on an assumed oil price of about $75 a barrel. Any increase, he said, would raise the country’s energy import bill and widen the budget deficit. He also cautioned that it could trigger another round of fuel price hikes, further worsening the cost-of-living crisis.

Egypt’s annual inflation rate stood at 14.3 percent in June, down slightly from 14.6 percent in May.

Despite the risks, El-Nahas stressed that some sectors, particularly tourism, still have strong growth prospects despite the renewed US-Iran conflict.

 

 

Business

China Temporarily Bans Helium Exports as US-Iran Tensions Flare Again

Ships and containers at a Chinese port (Reuters)
Ships and containers at a Chinese port (Reuters)
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China Temporarily Bans Helium Exports as US-Iran Tensions Flare Again

Ships and containers at a Chinese port (Reuters)
Ships and containers at a Chinese port (Reuters)

China announced on Friday a temporary export ban on helium, effective immediately, as resumption of military conflict in the Middle East threatens to trigger new shortages of the gas critical for chip manufacturing.

Earlier this year, the US-Israeli war on Iran led to helium shortages, disrupting companies globally, including in China, where the AI industry increasingly relies on domestic chips for training and ⁠running AI models. Helium is essential for heat management in semiconductor production.

The helium ban is the latest example of Beijing seeking to prevent domestic shortages of critical materials by curbing exports. It has previously imposed similar measures on fuel, fertilizers and sulfuric acid.

China is also looking to boost domestic chip manufacturing capacity and reduce the industry's dependence on cutting-edge Nvidia semiconductors that fall under US export controls.

China is heavily ⁠dependent on overseas helium despite efforts to expand domestic production.

Still, the export ban could squeeze global supply further because Chinese companies have increasingly acted as intermediaries, importing Russian helium and re-exporting some volumes to overseas markets, including Europe.

According to Reuters, analysts ⁠estimate China imports around 85% or more of its helium requirements. Qatar accounts for a major share of global helium output and has supplied more than half ⁠of China's imports in recent years.

Helium is extracted from natural gas fields with unusually high helium concentrations and cannot be quickly manufactured from ⁠other industrial processes.

In chipmaking, it is used for wafer cooling, plasma etching, chemical vapor deposition, atomic layer deposition, lithography support and leak detection.