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Arab News
12 hours ago
- Arab News
Saudi fiscal results show stability, economic growth
Saudi Arabia's Ministry of Finance has released the fiscal results for Q2 and the first half of 2025. Total revenues stood at SR302 billion ($80.5 billion) in Q2, marking a 15 percent decline from SR354 billion in the same period of 2024. The drop is mainly due to reduced oil revenues from lower prices and a one-time collection of performance-related profits last year. Non-oil revenues reached SR150 billion, a 7 percent increase from SR141 billion in Q2 2024. Total expenditure was SR336 billion, down 9 percent from SR369 billion last year. As a result, the budget deficit widened to SR35 billion, compared to SR15 billion in Q2 2024. However, the Q2 2025 deficit shrank by SR24 billion from Q1 2025, largely due to higher non-oil revenues. In the first half of 2025, total revenues reached about SR565 billion, down 13 percent from SR647 billion in the same period last year. This decline was mainly due to lower oil prices and a non-recurring collection of performance-related profits in H1 2024. Non-oil revenues during the first half of 2025 totaled about SR264 billion, a 5 percent increase from SR252 billion during the same period last year. Total expenditures in the first half of 2025 amounted to about SR658 billion, a 2 percent decrease compared to the same period last year. Real gross domestic product grew by 3.4 percent in Q1 2025 compared to the same period last year, driven by a 4.9 percent increase in non-oil activities and a 3.2 percent rise in government activities. In conclusion, despite oil revenues declining by 29 percent in Q2 and 24 percent in the first half of 2025 — resulting in a fiscal deficit in both periods — the Saudi government remains committed to the economic and fiscal transformation outlined in Vision 2030. The growth in non-oil revenues during Q2 and the first half of 2025 reflects the success of the government's reform efforts to diversify the Kingdom's income sources in line with Vision 2030. This increase has helped to offset lower oil revenues, stabilizing overall revenue performance. The government reaffirms its commitment to fiscal sustainability over the medium and long term. These efforts are vital to strengthening the Kingdom's economic resilience amid evolving global challenges. The fiscal results show the government's adoption of a counter-cyclical fiscal policy aimed at stabilizing the economy rather than amplifying fluctuations. Consumer spending grew about 9.1 percent in the first two months of Q2 (April and May), reaching about SR304.4 billion, reflecting strong consumer confidence in the economy. The e-commerce index grew by about 63.1 percent, reflecting significant advancement in electronic transactions, supported by the government's drive to expand electronic payments and promote digital transformation. Money supply (M3) grew about 9.4 percent year-on-year in May 2025, reaching SR3.091 trillion, reflecting continued expansion across various economic activities. The budget deficit is not a concern given the strong fiscal position, as the government pursues an expansionary fiscal policy, accelerates projects with economic and social returns, and strives to achieve the ambitious goals of Vision 2030. Economic and financial reforms have helped to mitigate the impact of declining oil activity through income diversification, improvements to the business environment, and support for growth across promising sectors. These reforms will further diversify the economic base, sustain growth, advance infrastructure development, and enhance public services to improve citizens' quality of life. • Talat Zaki Hafiz is an economist and financial analyst. X: @TalatHafiz
Arab News
a day ago
- Arab News
Trump admits that firing the central bank chief would destabilize the market
WASHINGTON: US President Donald Trump said on Friday that Federal Reserve Chair Jerome Powell will 'most likely' stay in his position even as Trump sharply criticized the Federal Reserve's policies. In an interview with Newsmax that aired on Friday, Trump said he would remove Powell 'in a heartbeat' and said the Fed's interest rate was too high but added that others have said Powell's removal would 'disturb the market.' 'He gets out in seven or eight months and I'll put somebody else in,' Trump said. In a post on his Truth Socia platform earlier, Trump said 'Powell should resign, just like Adriana Kugler, a Biden Appointee, resigned.'
Arab News
a day ago
- Arab News
Trump fires US labor official over data and gets earlier than expected chance to reshape Fed
WASHINGTON/NEW YORK: President Donald Trump on Friday fired a top Labor Department official on the heels of a market-shocking weak scorecard of the US job market, accusing her without evidence of manipulating the figures and adding to already growing concerns about the quality of economic data published by the federal government. In a second surprise economic policy development, the door for Trump to make an imprint on a Federal Reserve with which he clashes almost daily for not lowering interest rates opened much earlier than anticipated when Fed Governor Adriana Kugler unexpectedly announced her resignation on Friday afternoon. The two developments further rattled a stock market already reeling from his latest barrage of tariff announcements and the weak jobs data. The benchmark S&P 500 Index sank 1.6 percent in its largest daily drop in more than two months. • Trump claims in social media post that jobs numbers were rigged • No evidence to back Trump's claims • Fed Governor Kugler resigns, giving Trump an early chance for an appointment • Economists already have growing concerns about US data quality Trump accused Erika McEntarfer, appointed by former President Joe Biden, of faking the jobs numbers. There is no evidence to back Trump's claims of data manipulation by the Bureau of Labor Statistics, the statistical agency that compiles the closely watched employment report as well as consumer and producer price data. A representative for the BLS did not respond to a request for comment. Friday began with BLS reporting the US economy created only 73,000 jobs in July, but more stunning were net downward revisions showing 258,000 fewer jobs had been created in May and June than previously reported. 'We need accurate Jobs Numbers. I have directed my Team to fire this Biden Political Appointee, IMMEDIATELY. She will be replaced with someone much more competent and qualified,' Trump said in a post on Truth Social. DATA CONCERNS A Trump administration official who requested anonymity said that while all economic data is noisy, the White House has been dissatisfied with how large the revisions have been in the recent data and issues with lower survey responses. The problem started during COVID and has not been addressed in the years since. 'There are these underlying problems that have been festering here for years now that have not been rectified,' the person said. 'The markets and companies and the government need accurate data, and like, we just weren't getting that,' the official said. The BLS has already reduced the sample collection for consumer price data as well as the producer price report, citing resource constraints. The government surveys about 121,000 businesses and government agencies, representing approximately 631,000 individual worksites for the employment report. The response rate has declined from 80.3 percent in October 2020 to about 67.1 percent in July, BLS data shows. A Reuters poll last month found 89 of 100 top policy experts had at least some worries about the quality of US economic data, with most also concerned that authorities are not addressing the issue urgently enough. In addition to the concerns over job market data, headcount reductions at BLS have resulted in it scaling back the scope of data collection for the Consumer Price Index, one of the most important gauges of US inflation, watched by investors and policymakers worldwide. Trump's move fed into concerns that politics may influence data collection and publication. 'Politicizing economic statistics is a self-defeating act,' said Michael Madowitz, principal economist at the Roosevelt Institute's Roosevelt Forward. 'Credibility is far easier to lose than rebuild, and the credibility of America's economic data is the foundation on which we've built the strongest economy in the world. Blinding the public about the state of the economy has a long track record, and it never ends well.' FED CHANGE SOONER THAN EXPECTED Meanwhile, Kugler's surprise decision to leave the Fed at the end of next week presents Trump an earlier-than-expected opportunity to install a potential successor to Fed Chair Jerome Powell on the central bank's Board of Governors. Trump has threatened to fire Powell repeatedly because the Fed chief has overseen a policymaking body that has not cut interest rates as Trump has demanded. Powell's term expires next May, although he could remain on the Fed board until January 31, 2028, if he chooses. Trump will now get to select a Fed governor to replace Kugler and finish out her term, which expires on January 31, 2026. A governor filling an unexpired term may then be reappointed to a full 14-year term. Some speculation has centered on the idea Trump might pick a potential future chair to fill that slot as a holding place. Leading candidates for the next Fed chair include Trump economic adviser Kevin Hassett, Treasury Secretary Scott Bessent, former Fed Governor Kevin Warsh and Fed Governor Chris Waller, a Trump appointee who this week dissented with the central bank's decision to keep rates on hold, saying he preferred to start lowering them now. Trump, as he was leaving the White House to spend the weekend at his Bedminster, New Jersey, estate, said he was happy to have the open slot to fill. 'I would not read any political motivation into what [Kugler is] doing, although the consequence of what she's doing is she's calling Trump's bluff,' said Derek Tang, an analyst at LH Meyer, a research firm. 'She's putting the ball in his court and saying, look, you're putting so much pressure on the Fed, and you want some control over nominees, well, here's a slot.'
