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Funds, Financing Portfolios Allocate $1 Billion for Saudi Emerging Technologies

The second day of LEAP 2023 saw the launching of funds and programs to support the IT sector. (Asharq Al-Awsat)
The second day of LEAP 2023 saw the launching of funds and programs to support the IT sector. (Asharq Al-Awsat)
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Funds, Financing Portfolios Allocate $1 Billion for Saudi Emerging Technologies

The second day of LEAP 2023 saw the launching of funds and programs to support the IT sector. (Asharq Al-Awsat)
The second day of LEAP 2023 saw the launching of funds and programs to support the IT sector. (Asharq Al-Awsat)

Eight investment funds and programs allocated 3.7 billion riyals ($1 billion) to support Saudi Arabia’s IT sector.

On the sidelines of the LEAP 2023 conference in Riyadh, the Ministry of Communications and Information Technology unveiled on Tuesday investment funds to support the growth of startups and medium-sized companies, accelerate the electronic games industry, boost competition in the fields of research, development and innovation, and stimulate the ecosystem.

The conference saw the launching of STV’s first Shariah-compliant alternative financing fund, to enable the growth of technology companies, at a value of $150 million.

Similarly, IMPACT46 launched a $133 million fund, targeting tech startups in the Kingdom and the MENA region, while Merak Capital announced a $53 million Direct Lending Fund to support Saudi tech companies.

Shorooq Co. unveiled its second fund to invest in emerging companies in the Kingdom, in addition to launching another fund to accelerate electronic games worth $115 million.

Moreover, the Saudi Investment Bank (SAIB) announced the allocation of $40 million to launch an innovation incubator in the financial technology field and other fields to contribute to the growth of the financial sector.

Planetary Capital inaugurated the first Saudi-Canadian fund to invest in both local and global emerging space technology companies, at a value of $30 million, while Rakeezah holding launched a $25 million venture capital fund backed by a global accelerator in Riyadh.

Increased funding

In remarks at the opening of the second day of the LEAP 2023 conference, Eng. Haitham Al-Ohali, Deputy Minister of Communications and Information Technology, said: “We heard some international investors mention that the Crown Prince revealed an increase in financing growth in the Kingdom by 72 percent.”

He pointed to the alliances between Riyadh and Beijing in technology through startups and giant companies, with the aim to promote digital economic growth in the two countries, and to pump new global investments within the Kingdom.

Riyadh and Beijing

Major government institutions, companies, non-governmental organizations and academic institutions from Saudi Arabia and China launched the Saudi-China Entrepreneur Association (SCEA), on the sidelines of LEAP 2023.

The non-profit organization is supported by the Saudi Ministry of Communications and Information Technology and the Saudi Federation for Cybersecurity, Programming, and Drones. It will be operated by eWTP Arabia Capital.

It includes more than 100 founding members from institutions and companies, most notably the Saudi Telecom Company, Alibaba, Cloud, China Mobile and Tencent.

“In line with Saudi Arabia’s Vision 2030, SCEA will enable cross-border investments and valuable collaborations,” said Jerry Li, founder and managing partner of eWTPA.

For his part, Faisal Al-Khamisi, chairman of the Saudi Federation for Cybersecurity, Programming, and Drones, noted that China was a strategic partner for Saudi Arabia in terms of technology and innovation, stressing that the association would enhance mutual collaboration and provide the broader Saudi-China business community with a forum to share valuable experiences.

Support programs

The second day of the LEAP 2023 in Riyadh also saw the announcement of several support and financing programs.

Riyad Bank revealed financing for establishments operating in the communications and information technology sector at a value of one billion dollars.

Meanwhile, the Saudi National Program for the Development of the Communications and Information Technology Sector announced the launch of 6 new products that support and enable the system of digital entrepreneurship and technology companies in the Kingdom, in addition to attracting international technology companies, at a value of 1.1 billion riyals ($293 million).

Banque Saudi Fransi launched a financing portfolio worth one billion dollars to finance companies in the communications and IT sector.

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Business

Norway Sovereign Wealth Fund Loses Over $30 Bn in 3rd Quarter

A view shows the building of Norway’s central bank (Norges Bank) in Oslo, Norway, June 23, 2022. REUTERS/Victoria Klesty/ File Photo
A view shows the building of Norway’s central bank (Norges Bank) in Oslo, Norway, June 23, 2022. REUTERS/Victoria Klesty/ File Photo
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Norway Sovereign Wealth Fund Loses Over $30 Bn in 3rd Quarter

A view shows the building of Norway’s central bank (Norges Bank) in Oslo, Norway, June 23, 2022. REUTERS/Victoria Klesty/ File Photo
A view shows the building of Norway’s central bank (Norges Bank) in Oslo, Norway, June 23, 2022. REUTERS/Victoria Klesty/ File Photo

Norway's sovereign wealth fund, the world's largest with assets of more than $2 trillion, on Thursday reported a negative return of 278 billion kroner ($31 billion) in the third quarter as it was weighed down by higher interest rates.

It posted a negative return of 0.5 percent in the quarter, dragged down by a negative return of 3.5 percent in its fixed-income investments, while its equity and property portfolios increased by 0.5 percent and 0.4 percent respectively.

"The fund's return was close to flat, ending slightly negative as rising interest rates led to weaker results on our fixed-income investments," the fund's deputy CEO Trond Grande said in a statement.

Invested primarily in equities, bonds and real estate across the globe, the fund reported a value of 22,014 billion kroner at the end of September.

Inflation around the world, fuelled in particular by soaring energy prices linked to the conflict in the Middle East, has led several central banks, including the US Federal Reserve and the European Central Bank, to raise interest rates in the third quarter.

"Equity returns were also close to zero, but there were large differences between sectors.

Energy companies rose the most, while interest-rate-sensitive sectors such as utilities and real estate fell," Grande said, according to Reuters.

Fueled by the Nordic country's oil revenues, the fund is invested in more than 7,100 companies spanning the globe, and holds around 1.5 percent of all listed companies worldwide, making it the world's largest single investor.

Business

IMF: Non-Oil Activities Bolster Saudi Economy’s Resilience to Disruptions

King Fahd Highway in Riyadh (SPA)
King Fahd Highway in Riyadh (SPA)
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IMF: Non-Oil Activities Bolster Saudi Economy’s Resilience to Disruptions

King Fahd Highway in Riyadh (SPA)
King Fahd Highway in Riyadh (SPA)

The International Monetary Fund’s outlook for the Saudi economy points to promising prospects for recovery and growth, despite pressures from regional disruptions affecting energy production, trade flows and supply chains.

While the Kingdom’s GDP is expected to be affected in 2026 by a decline in oil and gas activity, non-oil activities are proving more resilient. The economy is projected to rebound strongly in 2027 as energy production gradually returns to normal and security and trade conditions improve.

The IMF’s Regional Economic Outlook, issued in October 2026, places Saudi Arabia among the major economies of the Middle East, North Africa, Afghanistan and Pakistan region, at a time when the region is grappling with the repercussions of conflicts and disruptions to energy supplies and global trade.

Temporary Growth Contraction, Non-Oil Activities Remain Resilient

The report forecasts that Saudi Arabia’s real GDP will contract by 3.3 percent in 2026, reflecting a decline in hydrocarbon-sector activity during the first half of the year amid disruptions affecting energy production, shipping and regional supply chains, particularly those linked to the Strait of Hormuz and Bab al-Mandab.

By contrast, the Kingdom’s non-oil activities have demonstrated resilience and performed relatively better than the energy sector, supported by sustained investment momentum and economic diversification programs associated with Vision 2030.

In the tourism sector, the Kingdom recorded the smallest decline in hotel occupancy rates compared with other countries directly affected by regional tensions, reflecting its relative ability to sustain tourism and services activity under the current circumstances.

Strong Rebound Expected in 2027

Despite the contraction expected in 2026, the IMF projects a strong rebound in the Saudi economy the following year, with real GDP forecast to grow by 7.9 percent in 2027.

The recovery is linked to the gradual return of energy production to normal levels, greater stability in security and trade conditions, and an improvement in global supply chains.

Over the medium term, the report projects Saudi real GDP growth to stabilize at around 3.6 percent by 2031, reflecting a return to a more stable growth trajectory following the volatility expected during the current period.

Inflation and Monetary Policy

On prices, average inflation in Saudi Arabia is estimated at around 2.7 percent in 2026 before stabilizing at approximately 2 percent in subsequent years, according to the projections cited in the report.

Factors including subsidies, price controls and fiscal discipline have helped contain inflationary pressures and maintain relative price stability compared with several other economies in the region.

On monetary policy, Gulf central banks, including Saudi monetary authorities, have taken steps in line with moves by the US Federal Reserve, with the aim of supporting financial market stability and limiting potential inflationary pressures.

Fiscal Resilience and Capacity to Absorb Shocks

Saudi fiscal policy in 2026 is characterized by discipline and prudence, while retaining room to direct spending toward strategic priorities, including infrastructure development, improving spending efficiency and supporting long-term structural reforms.

According to the report, the Kingdom also entered the period of regional disruption with comfortable reserves and fiscal buffers, helping it absorb temporary shocks that could affect the current account and official reserves.

These fiscal buffers are particularly important amid heightened regional and global uncertainty, providing greater capacity to withstand volatility while continuing to invest in economic priorities.

Artificial Intelligence

Investment in technology and artificial intelligence is one of the areas in which Saudi Arabia, alongside other Gulf countries, is seeking to expand its presence. The report examines announced investments in AI infrastructure and data centers, which, according to figures cited in the report, exceed 5 percent of GDP. These investments are expected to contribute to stronger productivity and growth over the medium term.

At the same time, structural reforms remain an important factor in strengthening the economy’s ability to withstand external shocks by increasing labor-market flexibility, investing in human capital and diversifying non-oil exports.

The report also points to the progress made by Gulf Cooperation Council countries in diversifying their merchandise exports over the past two decades, underscoring the importance of continuing efforts to broaden the production and trade base and reduce dependence on traditional sources of income.

Taken together, these trends underscore the importance of economic diversification and investment in new sectors in strengthening Saudi Arabia’s ability to weather the repercussions of current disruptions while preserving its medium-term growth prospects.

Business

IMF Says 2027 Recovery in Middle East Hinges on Easing Conflict, Resumption of Trade

IMF Middle East and Central Asia Department Director Jihad Azour speaks during the Regional Economic Outlook for the Middle East and Central Asia press briefing at the Annual Meetings of the International Monetary Fund (IMF) and the World Bank Group (WBG) at the Queen Sirikit National Convention Center (QSNCC) in Bangkok on October 15, 2026. (Photo by Lillian SUWANRUMPHA / AFP)
IMF Middle East and Central Asia Department Director Jihad Azour speaks during the Regional Economic Outlook for the Middle East and Central Asia press briefing at the Annual Meetings of the International Monetary Fund (IMF) and the World Bank Group (WBG) at the Queen Sirikit National Convention Center (QSNCC) in Bangkok on October 15, 2026. (Photo by Lillian SUWANRUMPHA / AFP)
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IMF Says 2027 Recovery in Middle East Hinges on Easing Conflict, Resumption of Trade

IMF Middle East and Central Asia Department Director Jihad Azour speaks during the Regional Economic Outlook for the Middle East and Central Asia press briefing at the Annual Meetings of the International Monetary Fund (IMF) and the World Bank Group (WBG) at the Queen Sirikit National Convention Center (QSNCC) in Bangkok on October 15, 2026. (Photo by Lillian SUWANRUMPHA / AFP)
IMF Middle East and Central Asia Department Director Jihad Azour speaks during the Regional Economic Outlook for the Middle East and Central Asia press briefing at the Annual Meetings of the International Monetary Fund (IMF) and the World Bank Group (WBG) at the Queen Sirikit National Convention Center (QSNCC) in Bangkok on October 15, 2026. (Photo by Lillian SUWANRUMPHA / AFP)

Jihad Azour, director of the International Monetary Fund’s Middle East and Central Asia Department, said the war in the Middle East was weighing on the region’s economic outlook, with economies across the Middle East and North Africa, Afghanistan and Pakistan expected to contract by 1.3% in 2026 before rebounding strongly in 2027, provided the conflict eases and trade gradually returns to normal.

Azour made the remarks at a news conference on Thursday to present the IMF’s Regional Economic Outlook report, which examines the economic fallout from the conflict and its varying effects across countries in the region.

The impact of the war is being felt through multiple channels, including energy, shipping, tourism, trade and confidence. Its effects vary across regional economies depending on whether countries export or import oil, their exposure to disruptions and their capacity to contain the economic fallout.

Recovery expected in 2027

The IMF’s growth projections are based on a scenario in which the conflict subsides in early 2027 and trade gradually returns to normal. Under this scenario, the economies of the Middle East and North Africa, Afghanistan and Pakistan are expected to contract by 1.3% in 2026 before growing by 6.6% in 2027.

The 2026 growth forecast is around 3 percentage points lower than the projection issued in April, reflecting the conflict’s impact on economic activity across the region.

The effects of the war differ between oil-exporting and oil-importing countries. Oil exporters have faced disruptions to energy production and shipping, while oil-importing economies have shown resilience, supported by domestic demand, remittances, tourism revenues and financial conditions, as well as government measures to limit the pass-through of higher commodity prices to consumers.

Gulf Cooperation Council economies are expected to experience a V-shaped recovery, with economic activity declining before rebounding. However, output is likely to remain below pre-conflict projections over the medium term, Azour said.

By contrast, growth in oil-importing countries is expected to accelerate in 2026 and 2027.

Economies in the Caucasus and Central Asia are projected to grow by 5.2% in 2026 and 5% in 2027, while inflation continues to ease.

The IMF raised its growth forecasts for the Caucasus and Central Asia compared with its April projections, as improved prospects for oil-importing countries offset downgrades for some oil exporters in 2026.

Inflation and external balances under pressure

Azour expects inflation to rise across the Middle East and North Africa, Afghanistan and Pakistan in 2026, while continuing to decline in the Caucasus and Central Asia.

Government measures, including subsidies, price controls and fixed exchange rates, have helped limit the pass-through of higher commodity prices to consumers in parts of the region. However, these measures come at a fiscal cost.

External positions are expected to weaken across most economies in both regions, with the GCC’s current account surplus projected to narrow from around 5% of gross domestic product in 2025 to 1.3% in 2026.

Uncertainty remains exceptionally high

Azour said uncertainty surrounding the outlook remained exceptionally high, with risks tilted to the downside.

Key risks include renewed disruptions to energy production or trade routes, which could drive up energy prices and intensify pressure on regional economies.

Other risks include a tightening of external financial conditions if markets reassess expected productivity gains from artificial intelligence, as well as higher interest rates amid concerns over inflation and public finances.

The Caucasus and Central Asia face additional risks, including renewed disruptions stemming from Russia’s war in Ukraine, lower oil prices and weaker external demand if markets linked to artificial intelligence undergo a sharp correction.

Low-income and fragile countries remain the most vulnerable, given their reliance on food imports, substantial financing needs and declining official development assistance, which constrain their ability to withstand economic shocks.

IMF urges stronger fiscal buffers, continued reforms

Azour said the main economic policy priorities were to maintain price stability and ensure fiscal sustainability. Monetary policy should serve as the first line of defense if upside inflation risks materialize, he said.

In the Caucasus and Central Asia, preserving gains in reducing inflation and strengthening central bank independence are key to anchoring inflation expectations and limiting the pass-through of future supply shocks to prices.

On fiscal policy, governments should provide temporary, targeted support to the households and businesses hardest hit by the crisis, rather than adopt broad-based measures that increase public debt without delivering lasting gains in economic activity.

Azour urged countries in the region to rebuild fiscal buffers through credible monetary frameworks, adequate reserves and sound public finances to strengthen their capacity to withstand future shocks.

He said the current disruptions also provided an incentive to seize long-term opportunities through structural reforms to boost productivity and create jobs, diversify trade and economic activity, deepen regional integration, and create conditions conducive to harnessing technology and artificial intelligence.