Russia War Could Further Escalate Auto Prices and Shortages

In this Monday, March 21, 2022, image made from video, Mark Wakefield, co-leader of AlixPartners’ global automotive unit, speaks during an interview with The Associated Press at the consulting firm’s offices in Southfield, Mich. Russia’s war on Ukraine is bringing new problems to the global auto industry. (AP)
In this Monday, March 21, 2022, image made from video, Mark Wakefield, co-leader of AlixPartners’ global automotive unit, speaks during an interview with The Associated Press at the consulting firm’s offices in Southfield, Mich. Russia’s war on Ukraine is bringing new problems to the global auto industry. (AP)
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Russia War Could Further Escalate Auto Prices and Shortages

In this Monday, March 21, 2022, image made from video, Mark Wakefield, co-leader of AlixPartners’ global automotive unit, speaks during an interview with The Associated Press at the consulting firm’s offices in Southfield, Mich. Russia’s war on Ukraine is bringing new problems to the global auto industry. (AP)
In this Monday, March 21, 2022, image made from video, Mark Wakefield, co-leader of AlixPartners’ global automotive unit, speaks during an interview with The Associated Press at the consulting firm’s offices in Southfield, Mich. Russia’s war on Ukraine is bringing new problems to the global auto industry. (AP)

BMW has halted production at two German factories. Mercedes is slowing work at its assembly plants. Volkswagen, warning of production stoppages, is looking for alternative sources for parts.

For more than a year, the global auto industry has struggled with a disastrous shortage of computer chips and other vital parts that has shrunk production, slowed deliveries and sent prices for new and used cars soaring beyond reach for millions of consumers.

Now, a new factor — Russia’s war against Ukraine — has thrown up yet another obstacle. Critically important electrical wiring, made in Ukraine, is suddenly out of reach. With buyer demand high, materials scarce and the war causing new disruptions, vehicle prices are expected to head even higher well into next year.

The war’s damage to the auto industry has emerged first in Europe. But US production will likely suffer eventually, too, if Russian exports of metals — from palladium for catalytic converters to nickel for electric vehicle batteries — are cut off.

“You only need to miss one part not to be able to make a car,” said Mark Wakefield, co-leader of consulting firm Alix Partners’ global automotive unit. “Any bump in the road becomes either a disruption of production or a vastly unplanned-for cost increase.”

Supply problems have bedeviled automakers since the pandemic erupted two years ago, at times shuttering factories and causing vehicle shortages. The robust recovery that followed the recession caused demand for autos to vastly outstrip supply — a mismatch that sent prices for new and used vehicles skyrocketing well beyond overall high inflation.

In the United States, the average price of a new vehicle is up 13% in the past year, to $45,596, according to Edmunds.com. Average used prices have surged far more: They’re up 29% to $29,646 as of February.

Before the war, S&P Global Mobility had predicted that global automakers would build 84 million vehicles this year and 91 million next year. (By comparison, they built 94 million in 2018.) Now it’s forecasting fewer than 82 million in 2022 and 88 million next year.

Mark Fulthorpe, an executive director for S&P, is among analysts who think the availability of new vehicles in North America and Europe will remain severely tight — and prices high — well into 2023. Compounding the problem, buyers who are priced out of the new-vehicle market will intensify demand for used autos and keep those prices elevated, too — prohibitively so for many households.

Eventually, high inflation across the economy — for food, gasoline, rent and other necessities — will likely leave a vast number of ordinary buyers unable to afford a new or used vehicle. Demand would then wane. And so, eventually, would prices.

“Until inflationary pressures start to really erode consumer and business capabilities,” Fulthorpe said, “it’s probably going to mean that those who have the inclination to buy a new vehicle, they’ll be prepared to pay top dollar.”

One factor behind the dimming outlook for production is the shuttering of auto plants in Russia. Last week, French automaker Renault, one of the last automakers that have continued to build in Russia, said it would suspend production in Moscow.

The transformation of Ukraine into an embattled war zone has hurt, too. Wells Fargo estimates that 10% to 15% of crucial wiring harnesses that supply vehicle production in the vast European Union were made in Ukraine. In the past decade, automakers and parts companies invested in Ukrainian factories to limit costs and gain proximity to European plants.

The wiring shortage has slowed factories in Germany, Poland, the Czech Republic and elsewhere, leading S&P to slash its forecast for worldwide auto production by 2.6 million vehicles for both this year and next. The shortages could reduce exports of German vehicles to the United States and elsewhere.

Wiring harnesses are bundles of wires and connectors that are unique to each model; they can't be easily re-sourced to another parts maker. Despite the war, harness makers like Aptiv and Leoni have managed to reopen factories sporadically in Western Ukraine. Still Joseph Massaro, Aptiv’s chief financial officer, acknowledged that Ukraine “is not open for any type of normal commercial activity.”

Aptiv, based in Dublin, is trying to shift production to Poland, Romania, Serbia and possibly Morocco. But the process will take up to six weeks, leaving some automakers short of parts during that time.

“Long term,” Massaro told analysts, “we’ll have to assess if and when it makes sense to go back to Ukraine.”

BMW is trying to coordinate with its Ukrainian suppliers and is casting a wider net for parts. So are Mercedes and Volkswagen.

Yet finding alternative supplies may be next to impossible. Most parts plants are operating close to capacity, so new work space would have to be built. Companies would need months to hire more people and add work shifts.

"The training process to bring up to speed a new workforce — it’s not an overnight thing,” Fulthorpe said.

Fulthorpe said he foresees a further tightening supply of materials from both Ukraine and Russia. Ukraine is the world’s largest exporter of neon, a gas used in lasers that etch circuits onto computer chips. Most chip makers have a six-month supply; late in the year, they could run short. That would worsen the chip shortage, which before the war had been delaying production even more than automakers expected.

Likewise, Russia is a key supplier of such raw materials as platinum and palladium, used in pollution-reducing catalytic converters. Russia also produces 10% of the world’s nickel, an essential ingredient in EV batteries.

Mineral supplies from Russia haven’t been shut off yet. Recycling might help ease the shortage. Other countries may increase production. And some manufacturers have stockpiled the metals.

But Russia also is a big aluminum producer, and a source of pig iron, used to make steel. Nearly 70% of US pig iron imports come from Russia and Ukraine, Alix Partners says, so steelmakers will need to switch to production from Brazil or use alternative materials. In the meantime, steel prices have rocketed up from $900 a ton a few weeks ago to $1,500 now.

So far, negotiations toward a cease-fire in Ukraine have gone nowhere, and the fighting has raged on. A new virus surge in China could cut into parts supplies, too. Industry analysts say they have no clear idea when parts, raw materials and auto production will flow normally.

Even if a deal is negotiated to suspend fighting, sanctions against Russian exports would remain intact until after a final agreement had been reached. Even then, supplies wouldn’t start flowing normally. Fulthorpe said there would be “further hangovers because of disruption that will take place in the widespread supply chains.”

Wakefield noted, too, that because of intense pent-up demand for vehicles across the world, even if automakers restore full production, the process of building enough vehicles will be a protracted one.

When might the world produce an ample enough supply of cars and trucks to meet demand and keep prices down?

Wakefield doesn’t profess to know.

“We’re in a raising-price environment, a (production)-constrained environment,” he said. “That’s a weird thing for the auto industry.”



ECB Grows More Confident About Cutting Rates, Policymakers Say

The European Central Bank headquarters in Frankfurt. SPA
The European Central Bank headquarters in Frankfurt. SPA
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ECB Grows More Confident About Cutting Rates, Policymakers Say

The European Central Bank headquarters in Frankfurt. SPA
The European Central Bank headquarters in Frankfurt. SPA

The European Central Bank is growing more confident about cutting interest rates as euro zone inflation continues to ease, three ECB policymakers said on Monday.
ECB policymakers Philip Lane, Gediminas Simkus and Boris Vujcic said separately that the latest inflation and growth data cemented their belief that inflation will head back to the central bank's 2% target by the middle of next year.
Euro zone inflation stood at 2.4% in April and a crucial indicator of underlying price pressures slowed while the economy staged a small rebound.
"Both the April flash estimate for euro area inflation and the first quarter GDP number that came out improve my confidence that inflation should return to target in a timely manner," ECB Chief Economist Lane told Spanish newspaper El Confidencial.
Simkus, Lithuania's central bank governor, was more outspoken, saying he continued to expect the ECB to reduce rates three times by the end of 2024.
"My thinking is that there are some other interest rate cuts coming in the future, but I will restrict myself from elaborating on how many, even if I have already expressed that this year, I would expect three cuts," Simkus told reporters in Vilnius, according to Reuters.
The ECB has all but promised a rate cut on June 6 and money markets are almost fully pricing in three cuts this year, with traders boosting their bets after some dovish rhetoric by the Federal Reserve and weak US jobs data late last week.
This would take the rate that the ECB pays on bank deposits from a record 4% to 3.25%, a level that most policymakers would still describe as restrictive -- or curbing economic activity.
"The incoming data so far are quite consistent with our projections," Croatian governor Boris Vujcic said at the Vilnius event. "If the projections stand, as we see it at the moment, I would expect the loosening of the policy stance, but still staying in the restrictive territory to make sure inflation is brought down to the 2% level."
While the ECB insists it is not dependent on the Fed, a widening interest rate gap between the world's biggest central banks would weaken the euro and boost European inflation, likely limiting the ECB's appetite for going it alone.
Lane said that April inflation data finally showed progress on services prices but the bank would continue to focus on services to make sure it did not derail disinflation later on.
The ECB expects it to fluctuate around this level for most of this year, before falling again in 2025.


Saudi-US Business Council to Mark 13th Anniversary of Its Founding

Interim President and CEO; Executive Director at US-Saudi Business Council Susanne Lendman. (SPA)
Interim President and CEO; Executive Director at US-Saudi Business Council Susanne Lendman. (SPA)
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Saudi-US Business Council to Mark 13th Anniversary of Its Founding

Interim President and CEO; Executive Director at US-Saudi Business Council Susanne Lendman. (SPA)
Interim President and CEO; Executive Director at US-Saudi Business Council Susanne Lendman. (SPA)

The Saudi-US Business Council will organize a celebration Wednesday in Houston, Texas, on the occasion of the 13th anniversary of its founding. Investment and business figures from the two countries will attend.
In a statement to the Saudi Press Agency, the council's interim President and CEO Susanne Lendman stated that the anniversary comes as American exports to the Kingdom hit $13.87 billion in 2023, amid thriving expectations for trade relations between the two countries.
She emphasized the council’s commitment to facilitating partnerships through targeted outreach, missions, executive roundtables, and seminars throughout the United States to increase broad opportunities for trade and investment between the two countries.


Biggest Water Theme Park in the Region 'Aquarabia' Joins Six Flags Qiddiya City

Located in Qiddiya City, Aquarabia will complement Six Flags Qiddiya City, the city's flagship theme park. SPA
Located in Qiddiya City, Aquarabia will complement Six Flags Qiddiya City, the city's flagship theme park. SPA
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Biggest Water Theme Park in the Region 'Aquarabia' Joins Six Flags Qiddiya City

Located in Qiddiya City, Aquarabia will complement Six Flags Qiddiya City, the city's flagship theme park. SPA
Located in Qiddiya City, Aquarabia will complement Six Flags Qiddiya City, the city's flagship theme park. SPA

The Board of Directors of the Qiddiya Investment Company (QIC) has announced the launch of Aquarabia, the first water theme park of its kind in Saudi Arabia and the largest in the region.

Located in Qiddiya City, Aquarabia will complement Six Flags Qiddiya City, the city's flagship theme park and the first Six Flags park to be designed and built outside of North America.

Embracing Qiddiya's Power of Play philosophy, Aquarabia will be Saudi's first home-grown water theme park and will draw visitors from across the globe with its twenty-two rides and family-friendly water-based experiences. This includes four world records, including the world's tallest water coaster, the tallest drop body slide, the tallest water slide, and the longest mat racer.

Aquarabia will also offer the first underwater adventure ride featuring fully submersible vehicles. Adrenaline lovers will enjoy an extreme watersports zone dedicated to rafting, kayaking, canyoneering, free solo climbing and cliff jumping, as well as the Kingdom's first surf pool. Moreover, Aquarabia will offer immersive, narrative-based design elements and attractions seldom seen in water parks, with its theming based around ancient desert wellsprings and Qiddiya’s wildlife seeking an oasis.

Aquarabia will complement Qiddiya City's theme park offering with the previously announced Six Flags Qiddiya City, a thrill park that will push the boundaries of the possible with twenty-eight rides and attractions.

Six Flags Qiddiya City will feature five world record-breaking coasters spread across six uniquely themed lands: Sirocco Tower, the world’s tallest free standing shot tower ride; Gyropsin, the world’s tallest pendulum ride; Spitfire, the world’s tallest inverted top hat coaster; Iron Rattler, the world’s tallest tilt coaster; and the Falcons Flight, the world's tallest, fastest and longest roller coaster which will run parallel to the F1 track.

Aquarabia and Six Flags Qiddiya City are located within Qiddiya City in an entirely walkable neighborhood where visitors can find a unique selection of activities and a broad range of hotels, dining options and even a green oasis to unwind and recharge between exhilarating rides and adrenaline-pumping experiences. Through innovative design and infrastructure, visitors will move around effortlessly, minimizing journey time and maximizing enjoyment. The seamless connection between both new parks is a statement that in Qiddiya City, every moment spent exploring is filled with excitement.


Saudi Arabia’s Alat Boosts Sustainable Manufacturing Capabilities

Alat is a company focused on transforming global industries (electronics and industrials) and creating a world-class manufacturing hub in the Kingdom of Saudi Arabia powered by clean energy. SPA
Alat is a company focused on transforming global industries (electronics and industrials) and creating a world-class manufacturing hub in the Kingdom of Saudi Arabia powered by clean energy. SPA
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Saudi Arabia’s Alat Boosts Sustainable Manufacturing Capabilities

Alat is a company focused on transforming global industries (electronics and industrials) and creating a world-class manufacturing hub in the Kingdom of Saudi Arabia powered by clean energy. SPA
Alat is a company focused on transforming global industries (electronics and industrials) and creating a world-class manufacturing hub in the Kingdom of Saudi Arabia powered by clean energy. SPA

Alat, a PIF company focused on transforming global industries (electronics and industrials) and creating a world-class manufacturing hub in Saudi Arabia, has announced the launch of two new business units - Electrification and AI Infrastructure.

Alat made the announcement in a press release on Monday. It said the two business units will address unprecedented global demand for AI infrastructure and the urgent need to support global energy transition by strengthening electricity grid technology.

Electrification is a key goal for Alat to not only strengthen grid technology for robust and increased use of technology, but also as the growth of electricity grows exponentially, with electricity being the key energy produced by solar, wind and hydrogen clean energy to power industrial processes, it said.

By combining Saudi Arabia’s rich resources of solar energy and other clean energy sources with electric powered industrial systems, Alat intends to manufacture solutions that will contribute significantly to the global energy transition and the decarbonization of industry, the statement added.

According to the statement, the Electrification business unit will focus on transmission and distribution technologies. It will also include the connection of renewable energy sources to the grid and latest technologies for gas and hydrogen generation and compression.

The AI Infrastructure business unit is focused on the technology necessary for AI capabilities and encompasses network and communications equipment, servers, data center networking equipment, data center storage, industrial edge servers, and industry 4.0 computing, said Alat.

The adoption of AI in combination with other industry 4.0 technologies, including robotics, will enable a leap forward in smart manufacturing and the creation of intelligent factories. The AI Infrastructure Business Unit will not only manufacture solutions for Alat customers but will also contribute to Alat’s advanced technology goals, it added.

"I am pleased to announce these two exciting new divisions as they will make a significant contribution to Alat’s overall strategic goal of developing an advanced, sustainable future for industry,” the statement quoted Global CEO at Alat Amit Midha as saying.


Lord Mayor of London: Intense Efforts Underway to Deepen Partnerships between Saudi Arabia, UK

Lord Mayor of London Michael Mainelli. (Asharq Al-Awsat)
Lord Mayor of London Michael Mainelli. (Asharq Al-Awsat)
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Lord Mayor of London: Intense Efforts Underway to Deepen Partnerships between Saudi Arabia, UK

Lord Mayor of London Michael Mainelli. (Asharq Al-Awsat)
Lord Mayor of London Michael Mainelli. (Asharq Al-Awsat)

Lord Mayor of London Michael Mainelli revealed that intense efforts are underway to maximize fintech, green financing, AI, space and cyberspace partnerships with Saudi Arabia.

He added that the UK and Saudi Arabia are important trade partners. “The UK is Saudi Arabia’s largest trading partner in Europe,” he told Asharq Al-Awsat in an interview on the sidelines of his participation at the special meeting of the World Economic Forum in Riyadh last week.

“By working together, British expertise and innovation in sustainable finance can help the Saudi financial services sector to unlock the huge opportunities offered by the green transition,” he remarked.

“One of the major projects we have coming up with Saudi Arabia is the UK-Saudi Sustainable Infrastructure Summit taking place at Mansion House in London on the 24 June in partnership with the Saudi British Joint Business Council (SBJBC UK),” he revealed.

Greatest trade partner

Moreover, Mainelli said: “The UK and Saudi Arabia are important trade partners. The UK is Saudi Arabia’s largest trading partner in Europe with trade worth £17.4 billion (SAR 82 billion). Meanwhile the Gulf Cooperation Council (GCC) is the UK’s fourth largest trading partner with trade worth £65 billion (AR 305 billion). While Saudi investment in the UK is estimated to be worth up to £65 billion (SAR 305 billion).”

“We welcome the ongoing free-trade negotiations between the GCC and the UK and we hope it follows the recommendations of the UK-GCC Joint Trade and Investment Review, which called for swift progress on market access in professional, business and financial services,” he went on to say.

On the importance of the Davos Riyadh Forum and to what extent there will be new opportunities for bilateral, regional and global cooperation in providing clean energy, he said: “The World Economic Forum in Riyadh was an opportunity for Saudi Arabia to showcase the extraordinary progress they’ve made in diversifying their economy away from oil and gas as part of their ambitious Vision 2030.”

“It's great that Saudi Arabia is looking really deep into its future, and I applaud that. I think where Saudi Arabia is headed in hydrogen technology has great potential, as well as in the fields of biology and healthcare,” stressed Mainelli.

“One of the best things about Vision 2030 is the creation of good intellectual jobs for the Saudi people. It is an uplifting vision of what a nation of 40 million can achieve,” he said.

“The UK and London’s expertise in fintech, green finance and insurance make it a natural partner of choice to help Saudi Arabia achieve its Vison 2030 objectives of a diversified economy, financial inclusion and sustainable development.”

“As the UK’s international ambassador for financial and professional services I’m here in the Kingdom to meet with Saudi Arabia’s emerging fintech and green finance clusters, as well as AI and space companies. I will also be holding bilateral meetings with ministers from the finance ministry and investment ministry to discuss how best to deepen our partnership with Saudi Arabia in financial services, notably insurance, banking, digital, green finance, cybersecurity and fintech,” he revealed.

Twinning between London, Riyadh

On the trend towards twinning between London and Riyadh and the most important cooperation projects proposed for both parties, he noted that the UK-Saudi Sustainable Infrastructure Summit in June is one of the major projects coming up with Saudi Arabia.

“The summit will convene up to 200 high-level participants, including policymakers, industry leaders, and financial professionals from the UK and Saudi Arabia, alongside international attendees. It will focus on facilitating knowledge exchange between the UK and Saudi Arabia, with an ambition on deepening existing bilateral partnerships,” said Mainelli.

“In addition, it will encourage more UK financial and professional firms to become proactive partners in offering their skills, products, expertise and capital to help Saudi Arabia reach their sustainable infrastructure ambitions as outlined in Vision 2030. It also demonstrates the importance of creating partnerships and meaningful long-term collaboration between the two Kingdoms.”

“The topics of the summit include: The importance of UK-Saudi Collaboration in Sustainable Infrastructure Development and Advancing the Green Transition; Financing Sustainable Infrastructure: Bridging the investment gap, and the role of public-private partnerships and innovative financing models; Urbanization and Sustainable City Development: Giga Projects and smart urban planning; Green Technology and Renewable Energy Initiatives: Scaling green technologies and promoting innovation,” he revealed.

Mainelli added: “Saudi Arabia is a country at the heart of economic transformation and sustainable development through its economic diversification plan, Vision 2030. With the UK a world leader in sustainable finance, I’m confident that the summit will create solutions and set a template for the rest of the world to follow.”


CEO of Savvy Games Group: Saudi Arabia to Become Global Hub for Electronic Games Industry

Participants are seen at an e-sports event that was recently held in Saudi Arabia. (Asharq Al-Awsat)
Participants are seen at an e-sports event that was recently held in Saudi Arabia. (Asharq Al-Awsat)
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CEO of Savvy Games Group: Saudi Arabia to Become Global Hub for Electronic Games Industry

Participants are seen at an e-sports event that was recently held in Saudi Arabia. (Asharq Al-Awsat)
Participants are seen at an e-sports event that was recently held in Saudi Arabia. (Asharq Al-Awsat)

Saudi Arabia is moving forward in the electronic games industry as part of its efforts to be a global hub in the sector and to attract foreign investments.

The Savvy Games Group, which is wholly owned by the Public Investment Fund (PIF), seeks to develop this promising industry, stated its CEO, Brian Ward.

In an interview with Asharq Al-Awsat, Ward said Savvy aims to become the leading international gaming company in the world and the first investor in the games and e-sports sector at the global level.

The company’s goals also include transforming the Kingdom into the next global hub for games, he underlined, noting that there were currently 16 centers around the world and Riyadh aims to become be the 17th and one of the largest hubs.

Ward revealed that Savvy’s strategy consisted of three pillars. They are: investing in game development and distribution, working with other concerned parties in Saudi Arabia, including government entities, giant projects, or commercial bodies, in order to transform the Kingdom into a major global hub for gaming, and finally, developing e-sports.

He stressed that with regard to e-sports, Savvy has acquired two companies, ESL and FACEIT, and merged them into one entity, and then added a third company called Vindex, which all have been integrated into the ESL FACEIT Group.

“We then invested 30 percent in an e-sports company based in China called (VSPO),” Ward added, explaining that Savvy currently owns 40 percent of the market share in e-sports around the world.

He explained that e-sports is primarily concerned with live events and tournaments, broadcasting live, and playing virtual sports games over the Internet.

He stressed that there is a great number of young Saudis who are very enthusiastic and knowledgeable about games, but the majority of them do not have experience in working in the field, pointing to the need for programs that build the appropriate skills to fill the jobs generated by foreign investments.

Ward highlighted Savvy’s endeavors in developing games, saying that the company has acquired Scopely, a large gaming company based in California and ranked fourth among the largest mobile gaming companies in the world.

Asked about the success factors that help the company achieve its goals, he talked about the support provided by the Saudi Public Investment Fund and the company’s Board of Directors, which have allocated $38 billion to the Savvy Games Group over a long period of time.

According to Ward, Saudi Arabia is the only country in the world that has adopted a national strategy for gaming and e-sports, which he said is expected to provide 39,000 jobs and establish 250 gaming companies.

To achieve this goal by 2030, very close coordination will take place between all the industry players and the different ministries, he underlined.

Touching on the main challenges that have faced the global gaming sector over the past two years, Ward said the macroeconomic climate has become a little more complex, meaning alternative sources of financing for some companies have been difficult, as venture capital, private equity, and public companies have generally been shrinking, not expanding.

He emphasized that the Savvy Games Group has long-term patient capital, thanks to the PIF, which enables it to be an alternative long-term strategic capital partner in an environment that has been more capital constrained.

Asked about the partnership between Savvy and Al Hilal Club, Ward said that the company was pleased to partner with the football club and congratulated it on winning the Saudi Super Cup final in the UAE.


Saudi Budget Results Highlight Progress in Implementing Reforms

A report issued by Riyad Bank expects the non-oil private sector to grow by 4.5% this year (SPA)
A report issued by Riyad Bank expects the non-oil private sector to grow by 4.5% this year (SPA)
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Saudi Budget Results Highlight Progress in Implementing Reforms

A report issued by Riyad Bank expects the non-oil private sector to grow by 4.5% this year (SPA)
A report issued by Riyad Bank expects the non-oil private sector to grow by 4.5% this year (SPA)

The Saudi budget statement for the first quarter of 2024 highlighted the government’s continued efforts to complete the reform process and achieve financial sustainability in the face of global challenges.
Saudi Arabia considers strengthening non-oil activities and empowering the private sector to be two pillars of Vision 2030. Last year, non-oil activities in Saudi Arabia grew by 4.7 percent, and recorded their highest contribution to real GDP ever at 50 percent.
Non-oil revenues in Saudi Arabia during the first quarter of 2024 amounted to about SAR 111.5 billion ($26.7 billion), an increase of 9 percent, compared to SAR 102.3 billion ($27.28 billion) in the same period last year.
Oil revenues reached SAR 181.9 billion ($48.5 billion), recording an increase of 2 percent compared to the first quarter of 2023, as total revenues reached SAR 293.433 billion ($78.2 billion).
This increase comes in light of the continued implementation of structural initiatives and reforms to diversify the economy and enhance non-oil revenues, in addition to developing tax administration and improving collection procedures.
Expenses
Total expenses in the first quarter of 2024 amounted to SAR 305.8 billion ($81.5 billion), recording an increase of 8 percent compared to the same period in 2023, where they reached SAR283.9 billion ($75.7 billion).
The government has continued to provide social support to those eligible, in addition to developing the level of public services provided to citizens and residents, and implementing many projects and strategies that achieve positive structural changes, with the aim to diversify the economic base.
Deficit
The budget deficit at the end of the first quarter of 2024 amounted to about SAR 12.4 billion ($3.3 billion), compared to about SAR 2.9 billion ($773 million) in the same period last year, due the Saudi trend to adopt expansionary spending for activities with economic returns, while accelerating the implementation of projects and programs with social and economic incomes.
At the same time, the Kingdom’s fiscal policy aims to achieve a balance between promoting economic growth, maintaining financial sustainability and developing non-oil revenues, while working to raise the efficiency of spending and increase the participation of the private sector in the economy.
Public debt
The total public debt until the end of the first quarter of 2024 was about SAR 1,115.8 trillion ($297.5 billion), including SAR 665.0 billion ($177.3 billion) in internal debt.
The figures of the first quarter of 2024 confirm that the government is completing the financial and economic reforms within the framework of Saudi Vision 2030, with the aim to achieve financial sustainability in the medium and long terms and enhance the strength of the economy, in the face of global economic challenges and developments.
Health and social development
Government support for the sectors of health, social development and municipal services is considered one of the pillars that contribute to improving and raising the quality of public services provided to citizens and residents, and thus promoting the quality of life, in accordance with Saudi Vision 2030.
Total spending on these sectors by the end of the first quarter of 2024 amounted to about SAR 87.3 billion ($23.28 billion), registering an increase of 22 percent compared to the same period last year.
Goods and services expenses
The first quarter report showed a significant increase in expenses on goods and services compared to the same period last year, as a result of a rise in expenditures on medical supplies for the health and social development sector, and the military.
This comes in parallel with an increase in spending on many programs and strategies related to promising sectors, including sports, in addition to the country’s efforts to develop the tourism sector.
The first quarter report also showed a significant increase in spending on the municipal services sector compared to the same period last year. This includes spending on developmental housing programs, which will contribute to raising the percentage of property ownership among Saudi families, as well as spending on a number of projects and initiatives aimed at improving the quality of life of citizens, such as the sports track project and the green suburbs initiative.
Non-oil revenues
The first quarter report also highlighted a rise in non-oil revenues compared to the same period or 2023.
The consumer spending index grew by about 10.6 percent during the first quarter, while bank credit granted to the private sector increased by about 10.1 percent and the number of factories that started production reached about 172 during the first two months of this year.
Economic strength
In remarks to Asharq Al-Awsat, Shura Council member Fadl al-Buainain said that the results of the Saudi budget during the first quarter of 2024 confirmed Saudi Arabia’s trend to expand spending on the health and social development sectors.
He noted that the figures also showed the government’s keenness to complete financial and fiscal reforms within the framework of Saudi Vision 2030.

 

 


SABIC Hosts First Boao Forum for Asia in Riyadh on Monday

Saudi capital, Riyadh (SPA)
Saudi capital, Riyadh (SPA)
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SABIC Hosts First Boao Forum for Asia in Riyadh on Monday

Saudi capital, Riyadh (SPA)
Saudi capital, Riyadh (SPA)

The Saudi Basic Industries Corporation (SABIC) will host in Riyadh on Monday the first Boao Forum for Asia conference under the theme “Energy Transformation for a Sustainable Future” to boost international cooperation and increase integration among various sectors.
Building on its 16-year strategic partnership with the forum, SABIC remains committed to enhancing cooperation among companies and countries linked to product value chains, a statement from the corporation said.
In addition to supporting the annual conferences, SABIC has also participated in several related conferences, including the “Science, Technology, and Innovation Forum” and the “Global Economic Development and Security Forum” under the Boao Forum for Asia, where SABIC shared its rich expertise in innovation and sustainability.
SABIC has enhanced its commitment to the Chinese market in recent years through the forum's leading role in promoting regional cooperation and sustainable and comprehensive growth.
It has collaborated with local partners to expand its presence since its entry into the country in the 1980s.
SABIC is dedicated to supporting high-quality economic development in China by offering more innovative solutions covering the entire value chain.
It has increased its activity in renewable energy applications in China to facilitate its transition towards sustainable development through an innovation-based strategy, which also forms a significant part of the company's global roadmap towards carbon neutrality.
As a leader in the chemical industry, SABIC seeks to support the transition in the energy sector towards a sustainable future by enhancing cooperation and innovation.
It is worth noting that China continues to adopt further economic reforms and enhance the Sino-Saudi strategic partnership, and SABIC continues to benefit from the Boao Forum for Asia as a prominent platform to enhance its participation in various industries and contribute to the strategic integration between China's Belt and Road Initiative and Saudi Vision 2030.

 


IMF Mission to Visit Pakistan This Month to Discuss New Loan

Laborers who work on daily wages wait to get hired in Karachi, Pakistan, (EPA)
Laborers who work on daily wages wait to get hired in Karachi, Pakistan, (EPA)
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IMF Mission to Visit Pakistan This Month to Discuss New Loan

Laborers who work on daily wages wait to get hired in Karachi, Pakistan, (EPA)
Laborers who work on daily wages wait to get hired in Karachi, Pakistan, (EPA)

An International Monetary Fund (IMF) mission is expected to visit Pakistan this month to discuss a new program, the lender said on Sunday ahead of Islamabad beginning its annual budget-making process for the next financial year.
Pakistan last month completed a short-term $3 billion program, which helped stave off sovereign default, but the government of Prime Minister Shehbaz Sharif has stressed the need for a fresh, longer term program.
“A mission is expected to visit Pakistan in May to discuss the FY25 budget, policies, and reforms under a potential new program for the welfare of all Pakistanis,” the IMF said in an emailed response to Reuters.
Pakistan's financial year runs from July to June and its budget for fiscal year 2025, the first by Sharif's new government, has to be presented before June 30.
The IMF did not specify the dates of the visit, nor the size or duration of the program.
“Accelerating reforms now is more important than the size of the program, which will be guided by the package of reform and balance of payments needs,” the IMF statement said.
Pakistan narrowly averted default last summer, and its $350 billion economy has stabilized after the completion of the last IMF program, with inflation coming down to around 17% in April from a record high 38% last May.
It is still dealing with a high fiscal shortfall and while it has controlled its external account deficit through import control mechanisms, it has come at the expense of stagnating growth, which is expected to be around 2% this year compared to negative growth last year.
Earlier, in an interview with Reuters, Finance Minister Muhammad Aurangzeb said the country hoped to agree the contours of a new IMF loan in May.
Pakistan is expected to seek at least $6 billion and request additional financing from the Fund under the Resilience and Sustainability Trust.


Saudi Trade Delegation Heads to Pakistan to Ink Economic Agreements

Billboards with images of Prince Mohammed bin Salman al-Saud (R), Crown Prince and Prime Minister of Saudi Arabia, and Custodian of the Two Holy Mosques King Salman bin Abdulaziz al-Saud (L) are displayed at a road in Islamabad, Pakistan, 04 May 2024. (EPA)
Billboards with images of Prince Mohammed bin Salman al-Saud (R), Crown Prince and Prime Minister of Saudi Arabia, and Custodian of the Two Holy Mosques King Salman bin Abdulaziz al-Saud (L) are displayed at a road in Islamabad, Pakistan, 04 May 2024. (EPA)
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Saudi Trade Delegation Heads to Pakistan to Ink Economic Agreements

Billboards with images of Prince Mohammed bin Salman al-Saud (R), Crown Prince and Prime Minister of Saudi Arabia, and Custodian of the Two Holy Mosques King Salman bin Abdulaziz al-Saud (L) are displayed at a road in Islamabad, Pakistan, 04 May 2024. (EPA)
Billboards with images of Prince Mohammed bin Salman al-Saud (R), Crown Prince and Prime Minister of Saudi Arabia, and Custodian of the Two Holy Mosques King Salman bin Abdulaziz al-Saud (L) are displayed at a road in Islamabad, Pakistan, 04 May 2024. (EPA)

A high-ranking Saudi trade delegation arrived in Pakistan on Sunday to sign a number of bilateral economic and investment agreements.

The 50-member delegation is headed by the deputy minister of investment and includes representatives of 30 companies from various sectors.

The delegation is visiting at the directives of the Saudi government that is committed to speeding up a package of projects worth 50 billion dollars.

Saudi Foreign Minister Prince Faisal bin Farhan bin Abdullah visited Islamabad in mid-April at the head of a delegation during which he chaired a meeting of the Saudi-Pakistani joint investment council.

The meeting tackled the most significant opportunities for economic cooperation in various fields.

They also discussed increasing the trade exchange between Saudi Arabia and Pakistan to meet mutual aspirations.

Pakistani Prime Minister Shehbaz Sharif was in Riyadh last week where he attended the special meeting of the World Economic Forum that was held in the Saudi capital.

Pakistan’s Petroleum Minister Musadik Malik said on Saturday that Sharif was keen on the private sector driving forward development in the country.

The Saudi investors will sit down for talks with Pakistani companies to discuss investment potential.

He added that bilateral cooperation will benefit small establishments, especially technology companies that have been set up by youths, whom he predicted will reap the lion’s share of investments from Saudi businessmen.