Saudi Arabia Fortifies Itself Against External Shocks with Proactive Measures in 2024 Budget

Saudi budget expectations for 2024 are positive in light of the developments and challenges facing the global economy. (SPA)
Saudi budget expectations for 2024 are positive in light of the developments and challenges facing the global economy. (SPA)
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Saudi Arabia Fortifies Itself Against External Shocks with Proactive Measures in 2024 Budget

Saudi budget expectations for 2024 are positive in light of the developments and challenges facing the global economy. (SPA)
Saudi budget expectations for 2024 are positive in light of the developments and challenges facing the global economy. (SPA)

Saudi Arabia has taken proactive measures to boost the ability of its economy to face challenges and developments, and to ensure financial sustainability.

This is reflected in the figures in the preliminary statement of the 2024 budget, through which the Kingdom is targeting revenues of SAR1.1 trillion ($312 billion), compared to expenditures of about SAR1.2 trillion ($333 billion), and a limited deficit of SAR79 billion ($21 billion), which represents 1.9 percent of the GDP.

The non-oil sector is a fundamental driver of economic growth in Saudi Arabia, highlighting major success in the process of economic diversification, one of the main goals of Vision 2030.

In a statement, the Ministry of Finance expected non-oil activities to grow at a rate of 5.9 percent during the current year, noting that this rate reached 6.1 percent in the second quarter of 2023.

In a recent interview with Fox News, Crown Prince Mohammed bin Salman emphasized the non-oil sector’s contribution to the Kingdom’s gross domestic product, which helped the Saudi economy achieve the highest growth rate among the G20 countries in 2022.

The International Monetary Fund (IMF) also announced last week that the Saudi economy was witnessing an economic transformation after implementing several reforms to reduce dependence on oil, diversify sources of income, and enhance competitiveness.

Reform measures

Experts believe that the structural improvements undertaken by the government have enhanced the growth of the domestic product of non-oil activities, which has been reflected positively on the performance of the country’s general budget.

In remarks to Asharq Al-Awsat, Economist Ahmed Al-Shehri said Saudi Arabia has carried out effective reform and crisis containment policies, supported by financial abundance and high foreign exchange reserves. The Kingdom’s economy stands on solid foundations, which are seen in the results of the state’s general budget in 2024.

Economic expert Ahmed Al-Jubeir told Asharq Al-Awsat that the government has put in place reform policies and measures to protect the economy from global crises.

He added that the policy of economic diversification and support for non-oil activities reflected positively on the performance of the general budget.

Financial sources believe that the expected deficit was due to increased spending on important sectors, such as defense, education and health.

In the preliminary statement for the 2024 budget, Saudi Arabia announced its continued work to raise the efficiency of spending and financial control, the sustainability of public finances, the implementation of economic and financial reforms, and the achievement of the goals of Vision 2030 and its major programs, initiatives and projects.

Local investment

According to the statement, the government will seek to raise the level of services provided to citizens and residents, in addition to promoting the growth of local investment by empowering the private sector and qualifying it to include all regions of the Kingdom.

It emphasized the proactive structural and financial measures adopted by Saudi Arabia to enhance the capacity of its economy, which improved the performance of the non-oil sector and increased the number of workers.

The government said all of these measures would contribute to the growth of the domestic product, attract investments, and stimulate economic activity, while developing public financial performance by increasing the financial space and building government reserves in a way that boosts the economy’s ability to confront global crises.

Economic diversification

Finance Minister Mohammed Al-Jadaan said the government will seek to implement structural reforms, with the aim of developing and diversifying the economy and raising growth rates while maintaining financial sustainability.

He pointed to the launching of many initiatives and strategies that aim to encourage promising economic sectors, improve investment attraction, stimulate industries, and raise the percentage of local content and non-oil exports.

Al-Jadaan underlined the importance of analyzing the financial and economic risks facing the country in order to tailor effective policies and strategies.

According to the Minister, preliminary estimates for next year point to a real GDP growth of 4.4 percent, supported by non-oil activities, amid expectations that the private sector will continue to lead economic growth and contribute to increasing business opportunities and creating jobs, in addition to improving the trade balance.



Tesla, Chips, and Banks Tumble as China’s Retaliation Stokes Fears of Widening Trade War

Tesla’s logo on a building of the Tesla Gigafactory in Gruenheide, near Berlin, Germany, 03 April 2025. (EPA)
Tesla’s logo on a building of the Tesla Gigafactory in Gruenheide, near Berlin, Germany, 03 April 2025. (EPA)
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Tesla, Chips, and Banks Tumble as China’s Retaliation Stokes Fears of Widening Trade War

Tesla’s logo on a building of the Tesla Gigafactory in Gruenheide, near Berlin, Germany, 03 April 2025. (EPA)
Tesla’s logo on a building of the Tesla Gigafactory in Gruenheide, near Berlin, Germany, 03 April 2025. (EPA)

US chip companies, banks and oil majors fell sharply on Friday after China retaliated to Trump's tariffs with steep duties, in an intensifying trade war between the world's two largest economies that cast a shadow on global growth.

China slapped additional duties of 34% on US goods, set to go into effect April 10. It also announced curbs on exports of some rare-earths and added several US firms to its export control list and the "unreliable entities" list, which allows Beijing to take punitive action.

The action followed US President Donald Trump's 34% duties on imports from China announced on Wednesday, which triggered a massive market meltdown on Thursday. The latest levies were on top of the 20% tariffs on China imposed earlier this year.

Investors were already fretting over potential supply chain disruptions, price hikes and demand destruction for everything from cars and smartphones to sneakers.

Shares of Tesla and Apple - among consumer tech companies with a large exposure to China - were down 8% and 4%, respectively. While both companies have local production in China, duties on US-imported parts could squeeze margins and force price hikes.

"Several tech companies have established local supply chains in China. Most source components from China already, and hence, disruptions should be controllable, though we do expect price hikes on parts and components not being sourced from China," said Nishant Udupa, practice director at research firm Everest Group.

For Tesla, already in a bruising price war with local Chinese rivals, raising prices would pressure demand further.

"Apple's smartphone sales had already been declining in China for some time, faced with growing, cheaper competition. So, the prospect of steep import duties being imposed is likely to sharply erode sales even further," said Susannah Streeter, head of money and markets at Hargreaves Lansdown.

Shares of Alphabet, Microsoft and Amazon.com were subdued as they had limited exposure to China.

GE Healthcare's stock slid nearly 13%, following China's export controls on a rare-earth metal that is used in MRI scans. The country's announcement of an anti-dumping investigation into imports of certain medical CT tubes from the US and India added to the worries.

SEMICONDUCTORS

Chip companies are set to face headwinds, too, although US exports a much smaller amount of electronic equipment to China. Shares of Intel, Applied Materials and Qualcomm, all of which count on China for at least 30% of revenue, were down 5% to 8%.

The US exported more than $15 billion worth of electrical and electronic equipment to China in 2024, with most of the value coming from integrated circuits, transistors and other semiconductor devices, according to economic data provider Trading Economics. In comparison, the U.S. imported more than $127 billion in electronic equipment from China last year.

"Semiconductors will feel a greater impact ... We're already witnessing a domestic ecosystem evolve in China, with direct alternatives for every major US semiconductor firm. This trend is likely to accelerate," Udupa said.

NATURAL RESOURCES

Crude prices, already under pressure from an expected OPEC+ oil output hike in May, added to the losses.

Oil majors Exxon and Chevron fell more than 5%. Top oilfield service company SLB dropped 10%, and the biggest US refiner by volume, Marathon Petroleum, fell 6%. Chemicals company DuPont slid 12%.

"The trade war escalated, recession fears rise and consequently oil demand growth is to take a sizeable hit," said Tamas Varga, analyst at PVM.

China is also the largest market for US agricultural products, even as imports of US farm goods dropped last year.

Shares of top grain traders like Archer-Daniels-Midland fell 8% while Bunge was down 6%. Fertilizer firms Mosaic and CF Industries fell 10% and 8%, respectively.

China's tariffs on US soybean exports would increase the cost to local customers, especially animal feed producers, and could prompt the country to source more from Brazil and Argentina, said Morningstar analyst Seth Goldstein.

BANKS

Banks' shares extended their declines from Thursday. The industry has been clouded by fears that a trade dispute could temper consumer confidence, reduce spending, weaken loan demand and pressure fees from advising on deals.

JPMorgan Chase, the biggest US bank by assets, sank 7%. Wall Street titans Goldman Sachs and Morgan Stanley dropped more than 7% each.

MACHINERY

Heavy machinery makers Caterpillar and Deere fell 5% and 4%, respectively, on concerns over demand from one of their largest overseas markets.

China is a major buyer of construction and agricultural equipment and a key player in global infrastructure spending.

RETAIL

Shares of major luxury and footwear firms reversed coursed after Trump said Vietnam's leader To Lam has offered to reduce tariffs on US imports. Ralph Lauren's shares were up 2.5%, while Tapestry rose as much as 3.6%.

Nike gained 4%, Roger Federer-backed On jumped 7.2% and Lululemon Athletica rose 3%. The stocks had initially fallen after retaliatory tariffs by China, a major revenue contributor.