Saudi Arabia Forges Economic Alliances with Global Powers

The Saudi Crown Prince, during his participation in the bidding ceremony to host Expo 2030 in the capital Paris (SPA)
The Saudi Crown Prince, during his participation in the bidding ceremony to host Expo 2030 in the capital Paris (SPA)
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Saudi Arabia Forges Economic Alliances with Global Powers

The Saudi Crown Prince, during his participation in the bidding ceremony to host Expo 2030 in the capital Paris (SPA)
The Saudi Crown Prince, during his participation in the bidding ceremony to host Expo 2030 in the capital Paris (SPA)

Since the beginning of 2023, Saudi Arabia has achieved significant economic milestones and successfully hosted several international conferences and events.

These endeavors have resulted in the establishment of economic alliances and blocs with major countries around the world.

Saudi Crown Prince Mohammed bin Salman launched giant projects throughout the year, contributing to the support of the economic diversification policy and aligning with the Kingdom’s vision for the next phase.

Saudi Arabia also achieved a historic milestone by winning the bid to host “Expo 2030,” the largest world fair.

After competing with South Korea and Italy, Saudi Arabia secured 119 votes from member countries, thus selecting Riyadh as the venue for the international expo in 2030.

Moreover, the Kingdom played host to numerous international economic conferences, forums, and events, including the 10th edition of the Arab-Chinese Businessmen Conference, the Saudi-Arab-African Economic Conference, the Saudi-Turkish Investment Forum, and the Saudi-Korean Investment Forum.

Saudi Arabia also hosted the Saudi-European Investment Forum, Climate Week, World Tourism Day events, and the seventh edition of the Future Investment Initiative, which witnessed significant attendance from leaders, officials, and CEOs of major companies worldwide.

Non-oil Activities

The Saudi government’s commitment to structural reforms in both the financial and economic spheres has contributed to the continuous growth of the non-oil gross domestic product (GDP) throughout 2023.

The government anticipated a non-oil GDP growth of 5.9% for the year.

As a result of these achievements, several credit rating agencies, the International Monetary Fund (IMF), and the World Bank have revised their expectations for Saudi Arabia’s economic growth.

The IMF noted that the Saudi economy is undergoing a transformation due to ongoing reforms aimed at reducing reliance on oil, diversifying income sources, and enhancing competitiveness.

Concurrently, credit rating agency Fitch upgraded its credit rating for Saudi Arabia to “A” with a stable outlook, reflecting its financial strength and substantial sovereign assets.

The recently approved state budget for the fiscal year 2024, led by King Salman bin Abdulaziz, focuses on enhancing non-oil sectors expected to contribute to a 4.4% growth in the kingdom’s overall GDP next year.

The budget estimates revenues at SAR 1.172 trillion ($312.5 billion) and expenditures at SAR 1.251 trillion ($333.6 billion), with a limited deficit of SAR 79 billion ($21 billion).

Labor Market

The Saudi Arabian labor market witnessed the highest citizen participation during Q2 of 2023 compared to previous quarterly periods.

The number of employees in the private sector increased to 2.2 million, and the unemployment rate among Saudis decreased to 8.3% from 9.7% in the same period in 2022.

This approaches the government target of 7% outlined in the Kingdom’s national transformation plan, “Vision 2030.”

Thanks to governmental measures and initiatives, the Kingdom successfully managed to control the inflation rate, which continued to gradually decrease from the beginning of the year until October.

It reached the lowest level in almost two years at 1.6% on an annual basis.

Energy Markets

In a significant economic development, Saudi Arabia’s Minister of Energy, Prince Abdulaziz bin Salman, announced new discoveries of natural gas in the Eastern Province and the Empty Quarter of the Kingdom.

He also revealed Saudi Arabia’s intention to operate the Middle East's first hydrogen-powered train in the coming months.

Regarding global energy markets, the Saudi government decided to voluntarily reduce its production by 1.5 million barrels per day to a level of 9 million barrels per day after the OPEC+ meeting in Vienna, Switzerland.

This move aims to support global oil markets and protect both producers and consumers from potential harm.



Dollar Tumbles as Investors Seek Safe Havens after US Tariffs

US Dollar banknote is seen in this illustration taken July 17, 2022. REUTERS/Dado Ruvic/Illustration/File Photo
US Dollar banknote is seen in this illustration taken July 17, 2022. REUTERS/Dado Ruvic/Illustration/File Photo
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Dollar Tumbles as Investors Seek Safe Havens after US Tariffs

US Dollar banknote is seen in this illustration taken July 17, 2022. REUTERS/Dado Ruvic/Illustration/File Photo
US Dollar banknote is seen in this illustration taken July 17, 2022. REUTERS/Dado Ruvic/Illustration/File Photo

The dollar weakened broadly on Thursday, while the euro rallied after President Donald Trump announced harsher-than-expected tariffs on US trading partners, unsettling markets as investors flocked to safe havens such as the yen and Swiss franc.

The highly anticipated tariff announcement sent shockwaves through markets, with global stocks sinking and investors scrambling to the safety of bonds as well as gold.

Trump said he would impose a 10% baseline tariff on all imports to the United States and higher duties on some of the country's biggest trading partners.

The new levies ratchet up a trade war that Trump kicked off on his return to the White House, rattling markets as fears grow that a full-blown trade war could trigger a sharp global economic slowdown and fuel inflation, Reuters reported.

The dollar index, which measures the US currency against six others, fell 1.6% to 102.03, its lowest since early October.

The euro, the largest component in the index, gained 1.5% to a six-month high of $1.1021.

Trump has already imposed tariffs on aluminium, steel and autos, and has increased duties on all goods from China.

"Eye-watering tariffs on a country-by-country basis scream 'negotiation tactic', which will keep markets on edge for the foreseeable future," said Adam Hetts, global head of multi-asset and portfolio manager at Janus Henderson Investors.

The risk-sensitive Australian dollar added 0.56% to $0.63365, while the New Zealand dollar climbed 0.9% to $0.5796.

The yen strengthened to a three-week high against the dollar and was last up 1.7% at 146.76 per dollar, while the Swiss franc touched its strongest level in five months at 0.86555 per dollar.

"Negotiations are now going to be front of mind. This is probably the other big part of why we're seeing some of these currencies outperform," said Nicholas Rees, Head Of Macro Research at Monex Europe.

"It's very difficult actually to see how other countries make concessions that would encourage the US to lift these tariffs. And I think that's a big underpriced risk."

Investors are worried that some US trading partners could retaliate with measures of their own, leading to higher prices.

EU chief Ursula von der Leyen described the tariffs as a major blow to the world economy and said the 27-member bloc was prepared to respond with countermeasures if talks with Washington failed.

Worries about a global trade war have intensified since Trump stepped into the White House in January, combining with a slew of weaker-than-expected US data to stoke recession fears and undermine the dollar.

The dollar index is down more than 5.7% this year.

"These tariffs have certainly significantly increased the risks to the downside for global growth, so on balance we think that will eventually start to become more supportive again for the dollar," said Lee Hardman, senior currency analyst at MUFG.

In Asia currencies, China's onshore yuan slid to its weakest level against the dollar since February 13. China's offshore yuan also hit a two-month low.

The Vietnamese dong slumped to a record low.

Elsewhere, the Mexican peso and Canadian dollar strengthened.

Canada and Mexico, the two largest US trading partners, already face 25% tariffs on many goods and will not face additional levies from Wednesday's announcement.