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Alkhorayef: Saudi Arabia Making Confident Strides Toward Localizing Automotive Industry

Alkhorayef spoke on Wednesday at the groundbreaking ceremony for the Hyundai plant at King Salman Automotive Cluster in King Abdullah Economic City in Jeddah. SPA
Alkhorayef spoke on Wednesday at the groundbreaking ceremony for the Hyundai plant at King Salman Automotive Cluster in King Abdullah Economic City in Jeddah. SPA
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Alkhorayef: Saudi Arabia Making Confident Strides Toward Localizing Automotive Industry

Alkhorayef spoke on Wednesday at the groundbreaking ceremony for the Hyundai plant at King Salman Automotive Cluster in King Abdullah Economic City in Jeddah. SPA
Alkhorayef spoke on Wednesday at the groundbreaking ceremony for the Hyundai plant at King Salman Automotive Cluster in King Abdullah Economic City in Jeddah. SPA

Saudi Minister of Industry and Mineral Resources Bandar Alkhorayef has said the Kingdom is making “confident strides” at an accelerated pace to localize the automotive industry.

Alkhorayef spoke on Wednesday at the groundbreaking ceremony for the Hyundai plant at King Salman Automotive Cluster in King Abdullah Economic City in Jeddah.

He said the Kingdom’s efforts will create added value for the national economy and enhance its global competitiveness in line with the objectives of Saudi Vision 2030.

The plant is being built under a strategic partnership between the Public Investment Fund (PIF) and Hyundai Motor Company, a move that supports the localization of the automotive industry in the Kingdom and advances economic diversification.

The minister described the initiative as an important milestone in the journey to localize the automotive industry due to its significant impact.

He added that it will enhance industrial capabilities, strengthen supply chains, localize production, and develop local content, meeting local and regional demand for automobiles and consolidating the Kingdom's position as a global hub for the automotive industry.

He praised PIF’s role in driving industrial transformation and empowering high-value sectors with tangible economic impact in the Kingdom and the region.

He also highlighted the importance of integrated efforts by all relevant government entities in advancing the localization of the automotive industry, including the establishment of the Hyundai plant.

He thanked the Ministries of Investment, Energy, and Finance; the Ministry of Economy and Planning; the National Industrial Development Center; and the Saudi Industrial Development Fund.

Alkhorayef stressed that the project aligns with the Kingdom's accelerating industrial goals and its vision to transform ambitions into reality.

The National Industrial Strategy aims to attract three global automotive manufacturers to produce 300,000 vehicles annually within a single industrial complex, a goal now realized with Hyundai joining Lucid and Ceer.

The factory is projected to produce 50,000 vehicles annually and contribute approximately $5 billion to the Kingdom's gross domestic product (GDP) by 2045.

Hyundai has had a presence in the Saudi market for over 40 years and currently holds the second-largest market share in the Kingdom’s automotive sector.

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Business

Saudi GDP Grows 2.8% in First Quarter

The Saudi capital, Riyadh (SPA)
The Saudi capital, Riyadh (SPA)
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Saudi GDP Grows 2.8% in First Quarter

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

Saudi Arabia's real gross domestic product grew 2.8% in the first quarter, year-on-year, preliminary government estimates showed on Thursday.

Non-oil activities grew 2.8% in the quarter, and oil activities increased 2.3% from the prior-year period, the General Authority of Statistics data ⁠showed.

On a quarterly basis, growth shrank 1.5% in the three months to March 31 compared to the fourth quarter, driven by a decline in oil activities.

Oil activity decreased 7.2% from the fourth quarter, while non-oil activity was almost flat.

Business

IMF Warns Asia to Keep Policy in Balance Amid Energy Disruptions

FILE PHOTO: A view of the International Monetary Fund (IMF) logo at its headquarters in Washington, D.C., US, November 24, 2024. REUTERS/Benoit Tessier/File Photo
FILE PHOTO: A view of the International Monetary Fund (IMF) logo at its headquarters in Washington, D.C., US, November 24, 2024. REUTERS/Benoit Tessier/File Photo
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IMF Warns Asia to Keep Policy in Balance Amid Energy Disruptions

FILE PHOTO: A view of the International Monetary Fund (IMF) logo at its headquarters in Washington, D.C., US, November 24, 2024. REUTERS/Benoit Tessier/File Photo
FILE PHOTO: A view of the International Monetary Fund (IMF) logo at its headquarters in Washington, D.C., US, November 24, 2024. REUTERS/Benoit Tessier/File Photo

Asian countries will need to keep their powder dry in preparation for future shocks even as they tackle an energy crisis caused by the Iran War, IMF Director for Asia Pacific Krishna Srinivasan said on Thursday.

With energy supplies running short due to the logjam in the Strait of Hormuz, southeast Asian economies have budgeted significant sums to cushion the impact of surging prices, and have also introduced measures to conserve energy, including work from home plans.

But Srinivasan, speaking at a media roundtable, warned countries against ramping up energy subsidies.

"If you give generalised subsidies, it's very hard to pull it back," he said, adding that countries should instead provide budget neutral ⁠and targeted fiscal ⁠support, and maintain fiscal discipline.

"In other words, cut elsewhere to support people who are being hit by the energy shock," Reuters quoted him as saying.

Srinivasan said that while some markets, such as Thailand and China, can hold off on tightening monetary policy because they are in deflationary territory, markets already above their inflation targets, including Australia, need to start now.

He also ⁠noted that some markets, such as the Philippines, have decided to tighten preemptively to anchor inflation expectations, but he added that the IMF's advice would have been to see through the shock and wait to see if inflation really picks up in a meaningful way.

"You may want to take insurance upfront or you may want to wait and see so that you don't hurt growth ... it's a very difficult balance to strike as a central bank governor," he said.

The IMF cut its global GDP outlook for 2026 to 3.1% on April 14, assuming ⁠a short-lived Middle ⁠East conflict and oil prices normalising in the second half of the year.

However, IMF chief economist Pierre-Olivier Gourinchas warned that the fund's "adverse scenario" of 2.5% growth looked increasingly likely, with continued energy disruptions and no clear path to end the conflict.

Srinivasan said that if the Strait of Hormuz remains closed beyond the next three months and oil prices stay elevated for the rest of the year, the IMF's more severe growth scenarios will become more likely.

There are still downside risks to growth, with a number of uncertainties facing the world economy, including the duration of the energy crisis and the severity of fertiliser shortages, which could create a food supply shock, he said.

Business

Euro Zone Inflation Soars Further Above ECB Target

FILE -Clouds cover the sky over the headquarters of the European Central Bank in Frankfurt, Germany, Sept. 11, 2025. (AP Photo/Michael Probst, File)
FILE -Clouds cover the sky over the headquarters of the European Central Bank in Frankfurt, Germany, Sept. 11, 2025. (AP Photo/Michael Probst, File)
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Euro Zone Inflation Soars Further Above ECB Target

FILE -Clouds cover the sky over the headquarters of the European Central Bank in Frankfurt, Germany, Sept. 11, 2025. (AP Photo/Michael Probst, File)
FILE -Clouds cover the sky over the headquarters of the European Central Bank in Frankfurt, Germany, Sept. 11, 2025. (AP Photo/Michael Probst, File)

Euro zone inflation surged further in April on soaring energy costs, Eurostat data showed on Thursday, adding to the case for interest rate hikes, even if benign underlying price growth figures ease the urgency of any move.

Inflation in the 21 countries sharing the euro currency jumped to 3.0% this month from 2.6% in March, moving further above the European Central Bank's 2% target, with energy costs accounting for the vast majority of the increase.

A closely watched figure ⁠on underlying or 'core' ⁠inflation, which excludes volatile food and energy prices, meanwhile slowed to 2.2% from 2.3% a month earlier.

Services inflation, a stubbornly high component of the price basket over the past several years, slowed to 3.0% from 3.2% while inflation for non-energy industrial ⁠goods, a key drag on prices picked up to 0.8%.

The figures are a mixed bag for the ECB, which is meeting on Thursday and will likely keep interest rates unchanged, even if it signals that policy tightening is increasingly likely, Reuters reported.

The high headline inflation print strengthens the argument for interest rate hikes but the underlying figures suggest that the initial energy shock is not yet creating major ⁠second round effects.

The ⁠ECB is largely powerless against an energy shock but must step in if these second round effects become visible as they risk creating a hard-to-break self-sustaining inflation spiral.

This is why investors expect the ECB to hike its 2% deposit rate already in June and see at least two more moves before the end of the year.

This outlook is volatile, however, and largely depends on developments in the Iran war and oil prices, which hit a four-year-high of $124 on Thursday.