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Saudi Arabia Registers Jump in Foreign Direct Investment Inflows

Attractive investment environment in Saudi Arabia brings foreign capital to the local market. (Asharq Al-Awsat)
Attractive investment environment in Saudi Arabia brings foreign capital to the local market. (Asharq Al-Awsat)
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Saudi Arabia Registers Jump in Foreign Direct Investment Inflows

Attractive investment environment in Saudi Arabia brings foreign capital to the local market. (Asharq Al-Awsat)
Attractive investment environment in Saudi Arabia brings foreign capital to the local market. (Asharq Al-Awsat)

Foreign direct investment flows recorded a growth of 46.5% during the second quarter of this year, compared to the same period of 2021, after excluding the Saudi Aramco deal amounting to 46.5 billion riyals ($12.4 billion).

Last year, Aramco forged a pipeline infrastructure deal worth 46.5 billion riyals ($12.4 billion) with an international consortium that acquired a 49% stake in the recently established crude oil supply company, under a 25-year sale and leaseback agreement.

According to a recent report issued by the Ministry of Investment, the investment licenses issued in the third quarter of this year amounted to around 928, representing an increase of 8.8% on an annual basis, with the exception of licenses issued under the campaign to combat commercial cover-up violations.

The report noted that foreign direct investment flows declined by 84.9% during the second quarter of 2022, on an annual basis, as a result of the increase in the volume of flows last year, because of the Saudi Aramco deal.

The report revealed a real GDP growth of 8.6% in the third quarter of 2022, on an annual basis, as a result of the remarkable rise in oil activities by 14.5%, and the increase in non-oil activities by 5.6%, while government activities recorded a jump of 2.4%.

According to the Ministry of Investment, the unemployment rate for Saudis decreased, in the second quarter of 2022, to 9.7%, compared to 10.1% during the previous quarter. The unemployment rate for male and female citizens decreased to 4.7% and 19.3%, respectively, during the same period.

The report disclosed that the real estate price index increased by 1.5%, during the third quarter of 2022, on an annual basis, driven by a rise in residential real estate prices by 2.5%.

The consumer price index rose by 3.1%, during last September, on an annual basis, due to an increase in food and beverage prices by 4.3%, and housing, water, electricity, gas and other fuels by 3.2%.

According to the report of the Saudi Ministry of Investment, the Purchasing Managers’ Index rose from 56.6 points last September to 57.2 points in October of this year, which indicates an improvement in the performance of the non-oil private sector due to strong demand and high business flows.

The ministry indicated that the average price of Brent crude rose by 21% during last September on an annual basis, bringing the average price of a barrel to $91.

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US Job Growth Surges in September, Unemployment Rate Falls to 4.1%

A woman enters a store next to a sign advertising job openings at Times Square in New York City, New York, US, August 6, 2021. REUTERS/Eduardo Munoz/File Photo
A woman enters a store next to a sign advertising job openings at Times Square in New York City, New York, US, August 6, 2021. REUTERS/Eduardo Munoz/File Photo
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US Job Growth Surges in September, Unemployment Rate Falls to 4.1%

A woman enters a store next to a sign advertising job openings at Times Square in New York City, New York, US, August 6, 2021. REUTERS/Eduardo Munoz/File Photo
A woman enters a store next to a sign advertising job openings at Times Square in New York City, New York, US, August 6, 2021. REUTERS/Eduardo Munoz/File Photo

US job growth accelerated in September and the unemployment slipped to 4.1%, further reducing the need for the Federal Reserve to maintain large interest rate cuts at its remaining two meetings this year.
Nonfarm payrolls increased by 254,000 jobs last month after rising by an upwardly revised 159,000 in August, the Labor Department's Bureau of Labor Statistics said in its closely watched employment report on Friday.
Economists polled by Reuters had forecast payrolls rising by 140,000 positions after advancing by a previously reported 142,000 in August.
The initial payrolls count for August has typically been revised higher over the past decade. Estimates for September's job gains ranged from 70,000 to 220,000.
The US labor market slowdown is being driven by tepid hiring against the backdrop of increased labor supply stemming mostly from a rise in immigration. Layoffs have remained low, which is underpinning the economy through solid consumer spending.
Average hourly earnings rose 0.4% after gaining 0.5% in August. Wages increased 4% year-on-year after climbing 3.9% in August.
The US unemployment rate dropped from 4.2% in August. It has jumped from 3.4% in April 2023, in part boosted by the 16-24 age cohort and rise in temporary layoffs during the annual automobile plant shutdowns in July.
The US Federal Reserve's policy setting committee kicked off its policy easing cycle with an unusually large half-percentage-point rate cut last month and Fed Chair Jerome Powell emphasized growing concerns over the health of the labor market.
While the labor market has taken a step back, annual benchmark revisions to national accounts data last week showed the economy in a much better shape than previously estimated, with upgrades to growth, income, savings and corporate profits.
This improved economic backdrop was acknowledged by Powell this week when he pushed back against investors' expectations for another half-percentage-point rate cut in November, saying “this is not a committee that feels like it is in a hurry to cut rates quickly.”
The Fed hiked rates by 525 basis points in 2022 and 2023, and delivered its first rate cut since 2020 last month. Its policy rate is currently set in the 4.75%-5.00% band.
Early on Friday, financial markets saw a roughly 71.5% chance of a quarter-point rate reduction in November, CME's FedWatch tool showed. The odds of a 50 basis points cut were around 28.5%.