Saudi non-oil sector resilient amid challenges: World Bank
Safaa El Tayeb El-Kogali, the World Bank's Country Director for the GCC Countries, said that the outlook for Saudi Arabia's economy in 2025 is broadly positive, with growth projected at 2.8%, gradually strengthening to 4.6% by 2027.
This anticipated increase is expected to be supported by the phase out of OPEC+ production cuts, which will benefit the oil sector, alongside continued strength in non-oil activities, she added, in an interview with Argaam.
The performance of Saudi Arabia's non-oil sector in 2024 stands out as a key highlight. While the oil sector faced headwinds from global production dynamics, the non-oil economy maintained strong growth at 4.3%. This resilience reflects the progress made in diversifying the economic base and enhancing the role of services and domestic consumption, said El-Kogali.
She added that the non-oil sector will likely remain a key driver of growth, buoyed by government initiatives to enhance infrastructure, attract investment, and promote private sector development.
She also indicated that the fiscal deficit widened in 2024, partly due to sustained public expenditure and fluctuating oil revenues, noting that, nonetheless, inflation remained low and stable, helping to maintain consumer purchasing power and macroeconomic stability.
According to El-Kogali, the private sector is expected to become the main engine of sustainable growth in Saudi Arabia. To enable this, the government plays a critical role in creating the right conditions—through investment in infrastructure, human capital, and institutional reforms.
The World Bank findings indicate that government consumption spending has a positive but relatively modest effect on non-hydrocarbon output, with fiscal multipliers ranging between 0.1 and 0.45 across GCC countries. These fiscal multipliers tend to be higher during economic downturns, highlighting the role of government spending as a stabilizing force when growth slows, said the top official.
On the other hand, government investment spending shows a smaller immediate impact, with a marginal increase in potential output estimated at around 0.07% for each one-percentage-point rise in investment, which is in line with literature, she added.
However, El-Kogali warned that Saudi Arabia faces both short-term and long-term challenges to sustaining growth, saying that, in the short term, global trade and economic uncertainty, fluctuating oil prices and production levels, and the potential spillovers from regional conflicts pose key risks to stability and growth momentum. Meanwhile, over the longer term, structural vulnerabilities remain, mainly the continued dependence on hydrocarbon revenues, and the persistent decline in productivity, which poses a challenge to competitiveness and economic diversification.
Addressing these issues through targeted reforms, innovation, and skills development will be essential to achieving the Kingdom's long-term growth objectives, she added.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Al Arabiya
an hour ago
- Al Arabiya
Israel's Oil Refineries resumes operations after shutdown due to Iran missile strike
Israel's Oil Refineries said on Sunday it had partly resumed activities at its Haifa facility, which was shut down following an Iranian missile strike two weeks ago. Israel's Oil Refineries, or Bazan, said in a regulatory filing in Tel Aviv that it was gradually restoring operations and would likely be fully operational by October. It noted that it holds insurance covering damage and profit losses of up to $250 million caused by acts of terrorism and war. The company said on June 15 that its pipelines and transmission lines in Haifa had been damaged by Iranian missile strikes, which killed three employees, and that it was examining the impact of the damage on its operations and implications on its financial results. Energy Minister Eli Cohen said separately on Sunday that Israel's energy system 'functioned flawlessly throughout the war, and the swift resolution of the issue at Bazan is further proof of the strength and resilience of Israel's energy sector.'
ArabGT
3 hours ago
- ArabGT
Everything You Need to Know About the 2026 Chevrolet Groove
Chevrolet has officially revealed the redesigned 2026 Chevrolet Groove, a modern compact SUV tailored for first-time buyers, young professionals, and families seeking practical mobility with style. This latest iteration marks a major evolution for the model, which has become a gateway for new customers in the region—92% of Groove buyers being first-time Chevrolet owners. With the 2026 version, Chevrolet strengthens its presence in the compact SUV segment by introducing a striking new design, upgraded trims, and enhanced focus on power, comfort, connectivity, and safety. The updated Groove reflects the brand's commitment to providing accessible and trustworthy transportation across key markets in the Middle East. Dynamic Design Meets Everyday Practicality The new Groove comes with a refreshed exterior that introduces a bold front grille, revised bumpers, and a more athletic silhouette. Available in two trims—LT and RS—the 2026 model adds a sportier flair, especially in the RS version which features a contrasting two-tone roof for added presence. Buyers can choose from six vivid exterior shades: Pearl White, Track Yellow, Tiger Blue, Glazed Red, Tungsten Grey, and Star Twinkle Black. Inside, the LT trim offers refined gray fabric seats, while the RS model steps up with black synthetic leather upholstery highlighted by red contrast stitching. Spacious Interior and Smart Versatility Inside, the 2026 Chevrolet Groove offers a comfortable five-passenger layout with generous legroom for both front and rear occupants. The 60/40 split-folding rear seats expand the cargo space up to 1,120 liters—ideal for everything from daily errands to weekend getaways. Next-Level Connectivity and Tech Integration A more seamless digital experience awaits in the new cabin. Both trims come standard with a larger 10.25-inch touchscreen infotainment system, supporting Apple CarPlay and Android Auto. The RS trim further distinguishes itself with a 7-inch fully digital instrument cluster, compared to the 3.5-inch display in the LT variant. Performance that Balances Power and Efficiency Under the hood, the 2026 Groove houses a 1.5-liter turbocharged engine producing 145 hp and 255 Nm of torque. It's paired with a CVT transmission and front-wheel drive for a smooth and fuel-efficient ride that fits daily use and weekend adventures alike. Safety Features for a Confident Drive Prioritizing the needs of new and young drivers, Chevrolet has equipped the new Groove with a suite of essential safety features from the base model. These include multiple airbags, rear parking sensors, and a rearview camera. For those seeking extra reassurance, the RS trim adds the Chevy Safety Assist suite, offering advanced features such as Adaptive Cruise Control, Forward Collision Alert with Automatic Emergency Braking, Lane Keep Assist, Traffic Jam Assist, Intellibeam, and Intelligent Driving Assist. Chevrolet's Commitment to Ownership Satisfaction Chevrolet continues to back its vehicles with Chevrolet Complete Care, offering a robust aftersales service program that includes access to the brand's expansive regional service network. Every new Groove comes with a 3-year/100,000 km manufacturer warranty (whichever comes first), reinforcing Chevrolet's reliability promise. Availability Across the Region The 2026 Chevrolet Groove will launch across several Middle Eastern markets including the UAE, Saudi Arabia, Kuwait, Qatar, Lebanon, and Iraq. Details on pricing and dealership availability will be shared soon.
Argaam
3 hours ago
- Argaam
MSX in talks with FTSE, MSCI to join global, emerging market indices: CEO
Muscat Stock Exchange (MSX) is working closely with FTSE and MSCI to upgrade the market for inclusion in global and emerging markets indices, CEO Haitham Al Salmi told Argaam. In an interview on the sidelines of the HSBC GCC Exchanges Conference 2025 in London, Al Salmi noted that the merger of Sohar International Bank and Alizz Islamic Bank will create a third large-cap company that meets index inclusion criteria, boosting the market's chances of being added to the watchlist. He emphasized that the focus remains on enhancing free float and liquidity, pointing out that the market already meets the technical requirements for an upgrade. MSX is also strengthening its fundamentals to attract more investment, including the planned launch of ETFs in collaboration with brokers, with a particular focus on the top five listed companies. Al Salmi highlighted the launch of the "Promising Companies Market" as an alternative investment platform, similar to growth markets in the region. The new market aims to list small, medium-sized, and family-owned businesses and is distinguished by the absence of market capitalization limits. It also offers various incentives, such as tax exemptions, priority in government tenders and privileges, and expedited access to government services and facilities. He added that the introduction of liquidity provision services and the activation of market makers have helped double trading volumes and significantly enhance liquidity. A third fund is currently being prepared for launch, and companies are increasingly acknowledging the importance of liquidity by appointing providers and expanding their mandates. The CEO also noted that integration with the Abu Dhabi and Bahrain markets has attracted additional brokers, with four firms now licensed as cross-border market makers and liquidity providers. The conference serves as an important platform to connect with investors, particularly since London is a key center for asset and portfolio managers investing in the Middle East and the Gulf. He stated that the event offers a valuable opportunity to highlight Oman's investment story, the progress made, and the attractive opportunities available in the market. This year, eight Omani companies participated in the conference, reflecting strong investor interest in the Omani market. Most of the participating companies are recently listed with strong capital bases and high liquidity, making them attractive to investors. The Omani delegation also included a government official to discuss economic diversification, Oman Vision 2040, and its impact on market development. Al Salmi added that Oman has opened its market to international investors since the enactment of the Foreign Investment Law in 2019, which removed limits on foreign ownership. The market is now fully open to investors of all nationalities, both individuals and institutions. He also pointed out that the government abolished withholding tax three years ago, meaning there are no taxes on profits or capital gains, and all returns go directly to investors. In conclusion, Al Salmi reaffirmed MSX's commitment to securing an index upgrade by further improving market liquidity. This is evidenced by the recent launch of international market-making services, with the first global market maker beginning operations in Oman last week through an exchange hub—highlighting growing international interest in the Omani capital market.
