Saudi Economy Heads Towards New Stage to Face Global Changes

King Salman delivers his speech on Wednesday. (SPA)
King Salman delivers his speech on Wednesday. (SPA)
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Saudi Economy Heads Towards New Stage to Face Global Changes

King Salman delivers his speech on Wednesday. (SPA)
King Salman delivers his speech on Wednesday. (SPA)

Following Custodian of the Two Holy Mosques King Salman bin Abdulaziz’s announcement of the start of the second phase of the Kingdom’s Vision 2030, experts told Asharq Al-Awsat that the coming period would witness great development leaps in all sectors.

According to the experts, the Saudi economy has proven its strength during the coronavirus pandemic, which has cast a shadow over all developed countries.

They noted in this regard that the Kingdom continued to provide initiatives to ease the burdens on the national economy and the private sector in particular.

On Wednesday, King Salman inaugurated the works of the second year of the eighth session of the Saudi Shura Council, pointing to the start of the second phase of the Saudi Vision 2030, which seeks to create a solid and diversified economy that faces global changes.

King Salman stressed that the national investment strategy launched by Crown Prince Mohammed bin Salman on Oct. 11 was one of the important tributaries to achieve the objectives of the Kingdom’s Vision. He added that investments exceeding 12 trillion riyals (USD 3.2 trillion) would be pumped into the local economy until 2030.

In this regard, Minister of Municipal and Rural Affairs and Housing Majid Al-Hogail stated that King Salman's speech before the Shura Council reflected his keenness on the well-being and interests of the Kingdom’s citizens and residents.

Chairman of the General Authority of Civil Aviation Abdulaziz Al-Duailej stated that King Salman’s speech underlined the “determination to achieve the interests of the citizens and residents, and to bolster security, stability, prosperity in the Kingdom.”

In remarks to Asharq Al-Awsat, economic expert Abdul Rahman Al-Jubeiry said King Salman's remarks “embodied Saudi Arabia’s pivotal role at the regional and international levels in all political, economic and development fields...”

Head of the Saudi Center for Governance, Nasser Al-Sahli told Asharq Al-Awsat that the Custodian of the Two Holy Mosques announced the completion of the first phase of Vision 2030 and the launch of the next stage to create a diversified and solid national economy that is abreast with global changes.

The Saudi private sector is witnessing a qualitative leap in terms of regulations and legislation that contribute to the growth of investments and attract foreign capital, Al-Sahli said, adding that this would have a positive impact on the gross domestic product and the achievement of the goals of Vision 2030.



Euro Zone Poised to Enter Trade Quagmire as Trump Wins

A container ship unloads its cargo in the German port of Hamburg (Reuters)
A container ship unloads its cargo in the German port of Hamburg (Reuters)
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Euro Zone Poised to Enter Trade Quagmire as Trump Wins

A container ship unloads its cargo in the German port of Hamburg (Reuters)
A container ship unloads its cargo in the German port of Hamburg (Reuters)

As Trump 2.0 becomes a reality, Europe is poised to enter a new geopolitical and trade quagmire with its biggest trading partner.

Donald Trump's victory may harm Europe's economy as proposed 10% US tariffs risk hitting European exports such as cars and chemicals, eroding Europe's GDP by up to 1.5% or about €260 billion.

Analysts warn of European Central Bank (ECB) rate cuts, euro weakness, and a recession risk.

According to several economic analyses, there is broad agreement that Trump's proposed 10% universal tariff on all US imports may significantly disrupt European growth, intensify monetary policy divergence, and strain key trade-dependent sectors such as autos and chemicals.

The long-term effects on Europe's economic resilience could prove even more significant if tariffs lead to protracted trade conflicts, prompting the European Central Bank (ECB) to respond with aggressive rate cuts to cushion the impact, according to Euronews.

Trump's proposed across-the-board tariff on imports, including those from Europe, could profoundly impact sectors such as cars and chemicals, which rely heavily on US exports.

Data from the European Commission shows that the European Union exported €502.3 billion in goods to the US in 2023, making up a fifth of all non-European Union exports.

European exports to the US are led by machinery and vehicles (€207.6 billion), chemicals (€137.4 billion), and other manufactured goods (€103.7 billion), which together comprise nearly 90% of the bloc's transatlantic exports.

ABN Amro analysts, including head of macro research Bill Diviney, warn that tariffs “would cause a collapse in exports to the US,” with trade-oriented economies such as Germany and the Netherlands likely to be hardest hit.

According to the Dutch bank, Trump's tariffs would shave approximately 1.5 percentage points off European growth, translating to a potential €260 bn economic loss based on Europe's estimated 2024 GDP of €17.4 tn.

Should Europe's growth falter under Trump's tariffs, the European Central Bank (ECB) may be compelled to respond aggressively, slashing rates to near zero by 2025.

In contrast, the US Federal Reserve may continue raising rates, leading to “one of the biggest and most sustained monetary policy divergences” between the ECB and the Fed since the euro's inception in 1999.

Dirk Schumacher, head of European macro research at Natixis Corporate & Investment Banking Germany, suggests that a 10% tariff increase could reduce GDP by approximately 0.5% in Germany, 0.3% in France, 0.4% in Italy, and 0.2% in Spain.

Schumacher warns that “the euro area could slide into recession in response to higher tariffs.”

According to Goldman Sachs' economists James Moberly and Sven Jari Stehn, the broad tariff would likely erode eurozone GDP by approximately 1%.

Goldman Sachs analysts project that a 1% GDP loss translates into a hit to earnings per share (EPS) for European firms by 6-7 percentage points, which would be sufficient to erase expected EPS growth for 2025.