The International Monetary Fund (IMF) has projected Saudi Arabia’s economy to grow at 7.6 percent this year – the highest growth rate among world economies for 2022.
“IMF’s estimates for the Kingdom of Saudi Arabia contradict the bleak and ambiguous outlook that stems from several main factors including the Russian-Ukrainian crisis, the restrictions of monetary policies in Europe, and the general closure measures as a result of the new outbreaks of Covid-19,” IMF said in its World Economic Outlook 2022, reported SPA.
The IMF said the high economic growth rate in Saudi Arabia will come amid challenges facing advanced economies and the global economy, and in light of the decrease in activity in Russia and China and a decline in US spending levels.
It also raised its expectations for the growth of the Saudi economy during the next year 2023 slightly as well.
This announcement comes less than a month after an IMF delegation concluded Article IV consultations with the Saudi government for 2022.
In its preliminary statement issued last June, the Fund praised the strength of the Kingdom’s economy and the strength of its financial position, reiterating the positive economic horizons of the country’ economy in the short and medium term, with the continued recovery of economic growth rates, containment of inflation, in addition to its growing external economic position.
Global rating agency Moody’s also projected Saudi Arabia’s economy to grow at an average rate of around 3.9 percent from 2022 to 2026.
Moody’s also said the structural economic, legal and social reforms that the government has been implementing to improve the business environment in Saudi Arabia will begin to bear fruit by way of higher private sector investment growth.
Here’s an overview of recent business/economic growth initiatives in Saudi Arabia and how the economic progress is echoing through the different sectors:
- Saudi Arabia’s healthcare sector is ‘entering a new era of opportunities’
- Saudi Arabia to launch nearly $400 million hospitality investment fund in ongoing tourism push
- Saudi Arabia to host roadshows in bid to lure global logistics giants
- Saudi Arabia is tapping Amazon to help launch dozens of new local startups
- Crypto investments rising in Saudi Arabia: Report
- Saudi capital Riyadh sees an increase in retail spaces as the sector rebounds
- Saudi Arabia’s sovereign wealth fund doubles down on gaming sector
- Construction: Saudi crown prince unveils futuristic, sci-fi design for Neom’s ‘The Line’
- Saudi Arabia, US businesses sign 13 deals covering 8 “promising sectors”
- Saudi Arabia sets up steering committee for implementing sustainable development goals
Saudi Arabia’s healthcare sector is ‘entering a new era of opportunities’
There are “substantial opportunities for investors and developers” in Saudi Arabia’s healthcare sector, according to JLL, a real estate, investment management consultancy.
Highlighting the promising landscape for healthcare infrastructure and medical service delivery, JLL recently advised Dubai-based Gulf Islamic Investments (GII) on a $530 million (AED1.9 billion) deal to acquire a stake in Saudi Arabia’s largest provider of dental and dermatology care.
GII bought a majority stake in Almeswak Dental Clinics from Saudi-based private equity firm Jadwa Investment Company.
Head of Healthcare Consulting – MEA at JLL, Sandeep Sinha, said: “The healthcare sector in the Kingdom is entering a new era of opportunities, driven not only by the goals outlined by Saudi Vision 2030 to enhance the quality of life, but also the government’s focus on boosting healthcare infrastructure.
“Saudi Arabia is witnessing an increase in private investment into the sector, with several upcoming healthcare PPP projects. This is a strong testament to the growing investor interest in the Kingdom’s healthcare industry.”
Co-CEO and co-founder of GII, Mohammed Al Hassan, said: “This landmark transaction is a major milestone for our continued growth and investment in the ever-expanding and exciting healthcare sector in Saudi Arabia.”
Pankaj Gupta, co-CEO and co-founder of GII, added: “The Kingdom’s rapidly increasing healthcare sector offers many attractive opportunities for investors as the largest healthcare market in the Gulf region.
“We look forward to tapping into its significant potential and further expanding our footprint as we explore a number of unique growing opportunities”.
The transaction also underscores the growing appeal of healthcare assets across the wider GCC region where the medical sector has been booming, led by an improvement in incomes and government investment in medical infrastructure for their citizens.
Saudi Arabia to launch nearly $400 million hospitality investment fund in ongoing tourism push
Saudi Arabia’s Tourism Development Fund (TDF) has announced setting up a SAR1.5 billion hospitality investment fund in collaboration with the UK-based global hospitality developer Ennismore and Al Rajhi Capital, a homegrown asset management company.
The fund is to be utilised for promoting lifestyle hotels and other hospitality projects in various tourist destinations within the Kingdom, SPA reported.
A tripartite agreement between TDF, Ennismore and Al Rajhi has been signed for the formation of the hospitality investment fund.
The agreement followed TDF and Ennismore signing a memorandum of understanding (MoU) to launch an investment fund focused on developing lifestyle hotels in the Kingdom at the 5th edition of the Future Investment Initiative (FII) in October 2021.
Under the latest agreement, the parties would identify locations and provide financing options for projects throughout the Kingdom.
TDF will invest in the newly established investment fund, while Ennismore will lead on developing and operating these projects under the umbrella of its lifestyle brands.
Al Rajhi Capital will manage the investment fund and attract investments.
The agreement was signed by chief executive officer of TDF Qusai Al Fakhri, Co-CEO of Ennismore Gaurav Bhushan, and CEO of Al Rajhi Capital Waleed AlRashed AlHumaid.
Al Fakhri said joining forces with both Ennismore and Al Rajhi Capital was yet another positive step towards realizing the Fund’s ambitions to advance the tourism sector in the country.
“We seek to continuously deliver new and diversified options, enabling the private sector to invest in the growing hospitality sector, with a view to enrich visitors’ experiences while achieving sustainable tourism and economic development,” he said.
Gaurav Bhushan said the partnership with TDF and Al Rajhi was a significant part of the hospitality developer’s growth strategy for the region.
“Ennismore is pleased to further cement its commitment to the growing Saudi hospitality sector through employing, training, and advancing national competencies, as well as providing tourism services that would build closer connections with international and local tourists,” he said.
According to AlHumaid, the tripartite agreement will open up lucrative investment opportunities across various tourist destinations in the country.
Through the agreement, TDF will augment its efforts to promote investments to provide a variety of leisure facilities and F&B experiences at tourist attractions, in line with the national tourism strategy.
The new hospitality investment fund is expected to provide around 2,000 hotel rooms and immense training opportunities for Saudi nationals, while enhancing the quality of investment opportunities and offerings within the sector.
Ennismore is a joint venture between Sharan Pasricha, founder and Co-CEO, and Accor, bringing together a lifestyle powerhouse of 14 brands with 101 operating properties globally, and 137 in the pipeline.
Its brands include 21c Museum Hotel, 25hours, Delano, Gleneagles, Hyde, JO&JOE, Mama Shelter, Mondrian and Morgans Originals.
Saudi Arabia to host roadshows in bid to lure global logistics giants
Saudi Arabia is planning to host a number of roadshows in the next 12 to 18 months in a bid to lure the likes of Amazon and DHL to boost its logistics capacity, Bloomberg reported.
The Kingdom plans to invite international companies for potential partnerships – including possibly setting up local freight-forwarding and warehousing activities – as part of its $100 billion plan to expand its aviation industry.
As part of its Vision 2030, Saudi Arabia wants to raise the amount of freight handled to 4.5 million tons annually. The national agenda is primarily aimed at transforming the Kingdom’s economy, and ultimately reduce reliance on oil.
Mohammed Fahad Alkhuraisi, vice president for strategy at the Saudi General Authority of Civil Aviation, who was attending the Farnborough International Airshow in London also spoke about the Kingdom’s efforts to expand its airport infrastructure, as well as its plans to launch a new passenger airline to be based in Riyadh.
Saudi Arabia is tapping Amazon to help launch dozens of new local startups
Monsha’at, the Kingdom’s General Authority for Small to Medium Enterprises (SMEs), has signed a deal with Amazon to launch the tech giant’s Delivery Service Partner program in the country.
The Saudi government aims to establish 30 new startups under the program, and create “hundreds of job opportunities,” according to a release.
“Small and medium enterprises are a key contributor to the national economy, and we at Monsha’at are keen to support and enable this vital sector through several programs, agreements and public-private sector partnerships,” Monsha’at Governor Saleh Al-Rasheed, said.
Under the program, Saudi entrepreneurs will have access to Amazon’s develiery technology, training programs, and discounts on the company’s branded assets including delivery vehicles, uniforms, and insurance schemes.
Saudi nationals with five to 10 years of experience can apply to the program – even without a specific background in delivery services. Amazon aims to bring the program to other parts of the Middle East and North Africa region.
Crypto investments rising in Saudi Arabia: Report
Around three million Saudis have invested in cryptocurrencies as of May 2022, a new study revealed, representing 14 percent of the country’s adult population.
Majority of these investors, however, have less than one year of experience in crypto investment – 49 percent of which have only started trading in the past six months, according to a recent report by global crypto exchange platform KuCoin.
The report comes as cryptocurrency gains traction in the Middle East, despite a current downward trend in the industry.
According to the report, around 31 percent of crypto owners in Saudi Arabia said they would keep their balance as is instead of investing more.
Crypto coins, in recent weeks, have struggled to keep momentum, led by losses of the world’s biggest digital currency in value Bitcoin. The market capitalisation of cryptocurrencies has plummeted from nearly $3 trillion to $875 billion, with analysts and investors bracing for a “crypto winter.”
Despite this, the KuCoin report said around 17 percent of Saudi adults are “crypto-curious,” who are likely to invest in cryptocurrencies over the next six months.
The report further revealed that 63 percent of crypto investors in Saudi are men – with the gender ratio remaining stable over the past months.
In terms of age, young crypto investors, or those below the age of 30, accounted for at a least third of the total by the second quarter of 2022, the KuCoin report showed.
More than half of crypto Saudi investors said they believe digital currencies are the future of finance, while 44 percent said they believe their crypto investments can bring them higher returns that other types of financial investments.
Social media is the most popular source of crypto-related information for Saudis, the report said, particularly noting YouTube and Twitter. Other platforms Saudis use include Telegram (35 percent), Facebook (30 percent) and Instagram (28 percent.)
Saudi capital Riyadh sees an increase in retail spaces as the sector rebounds
Saudi capital Riyadh has seen an increase of retail spaces in the first six months of the year, as the sector recovers from the impact of Covid-19.
Around 55,000 square metres of gross leasable area (GLA) was added to the Saudi capital’s total stock, which stood at 3.3 million square metres by the end of June this year, according to a new report by real estate consultant JLL.
Neighbouring cities also saw an increase in GLA in the same period – Jeddah with 16,000 square metres and Makkah with 17,500 square metres.
“For the first time in two years after the easing of restrictions relating to the COVID-19 pandemic, KSA is allowing over one million pilgrims to perform Hajj this month,” JLL’s head of research for the Middle East, North Africa, and Turkey, said in a statement.
He said the pandemic recovery is helping the Kingdom to reach its target of welcoming 12 million foreign visitors.
“Overall, the higher number of visitors will likely have positive implications for Saudi Arabia’s retail market,” he explained.
But the excess availability of retail spaces in Riyadh resulted in a decline in rents, the JLL report noted, recording quarter-on-quarter fall in the Saudi capital’s vacancy rate.
For regional and super-regional malls however, rents in Riyadh rose by 3 percent.
The retail sector in the Kingdom is benefitting a lot from the easing of Covid-19 restrictions in the country, which has spurred international tourism as well as local demand.
According to the Saudi central bank, point-of-sale transactions for April and May 2022 rose by 16 percent year-on-year totaling SAR91.8 billion across the Kingdom.
In Makkah, where thousands of pilgrims go for Umrah and Hajj, the hospitality sector recorded an almost three-fold increase in occupancy rate in the first five months of the year.
Saudi Arabia’s sovereign wealth fund doubles down on gaming sector
Saudi Arabia’s sovereign wealth fund is doubling down on the gaming sector, making its fourth investment in the sector so far this year.
Its Public Investment Fund (PIF) is taking a stake in Swedish video game maker Embracer one month after investing in Japan’s video game giant Nintendo.
The PIF is investing $1 billion (AED3.7 billion) to purchase 99.9 million B shares in Embracer. It is making the investment via its own Savvy Gaming Group, a gaming and e-sports group PIF set up in January.
“The Embracer team has built a truly unique and leading ecosystem of entrepreneurs and creators at a scale which we believe will continue to generate enormous value for the games community in the coming years,” said Brian Ward, CEO of Savvy Gaming Group.
Last month the $500-billion sovereign wealth fund acquired a 5.01 percent stake in Japanese gaming company Nintendo as part of Saudi Arabia’s economic diversification.
The Nintendo stake follows the PIF’s recent disclosure of stakes in two other Japanese gaming companies – Nexon and Capcom which the fund disclosed in February.
Lars Wingefors, founder and chief executive of Embracer, said: “Savvy Gaming Group will enable us to set up a regional hub in Saudi Arabia, from which we will be able to make investments across the MENA region, either organically, via partnerships, joint ventures, or via acquisitions of companies led by strong entrepreneurs.”
Nazih Fares, head of communications and localisation at 4 Winds Entertainment, a games publisher, said: “I personally think it’s an investment spree to diversify their portfolio out of oil and energy.
“But when you compare it to the rest of the Gulf especially UAE, the Saudi funds are in general a bit late on making an international impact on their ‘brand’. Look at all the big football and other sport teams sponsored by UAE or Qatari brands, for example.”
He said the rush to get to that level for Saudi Arabia will take longer, but “investing directly in big brands will help catch up on that diversification of revenue generated by those same international companies.”
He added that the $1 billion investment is part of its strategy to have a diverse range of forward-looking shareholders who support its long-term business plans.
“Over the past few years, Saudi-based entities have become one of the most significant investors in the global gaming market, and the games market in MENA is one of the world’s fastest growing, with $5.7 billion in 2021 revenues and more active gamers than either the US or Western Europe.
“The largest country in this market, by far, is Saudi Arabia and having visited Saudi Arabia, I have seen the gaming community and the opportunities firsthand,” said Wingefors.
Gaming consumption in Saudi Arabia is estimated to reach $6.8billion by 2030, according to the Boston Consulting Group (BCG).
“These figures point to plenty of untapped potential as more young Saudis pursue careers in game development, management, and esports competition,” stated a BCG report.
Last year, the PIF boosted its stake in US video game maker Activation Blizzard to $15.9 billion.
Matthew Pickering, CEO of Power League Gaming, a gaming and esports agency, said: “The gaming ecosystem in the MENA region is exciting on a number of levels, primarily due the expansion mechanics and growth velocity of the sector – we are experiencing sustained year-on-year growth to the tune of CAGR 15.8 percent.”
Combined with a youthful, hyper-engaged regional population with fast tech adoptions rates and high levels of mobile penetration, and this presents “exciting opportunities for further sustained development and provision of experiences by agencies and publishers alike to deliver value for gamers and brand partners and sponsors alike.”
Construction: Saudi crown prince unveils futuristic, sci-fi design for Neom’s ‘The Line’
Saudi Arabia has announced the designs of its “The Line” project, describing it as a “civilisational revolution that puts humans first.”
A part of the $500 billion megaproject Neom, the new development will eventually house 9 million residents, according to a statement, and will be built on a footprint of 34 square kilometres.
The Line is 200 metres wide, 170 kilometres long, and 500 metres above sea level.
First look of the project showed two parallel buildings, with mirror as outer walls, rising 500 metres above sea level. Saudi Crown Prince Mohammed bin Salman said “The Line” will embody “Zero Gravity Urbanism,” where city functions are layered vertically.
“The designs revealed today for the city’s vertically layered communities will challenge the traditional flat, horizontal cities and create a model for nature preservation and enhanced human livability,” he said in a statement.
He said it “will tackle the challenges facing humanity in urban life today and will shine a light on alternative ways to live.”
The crown prince claims residents will be able to reach all daily needs within a five-minute walk in “The Line,” where public parks and pedestrian areas, schools, homes and places for work are “layered.”
There will also be a high-speed rail with an end-to-end transit of 20 minutes, according to the statement.
Saudi Arabia, US businesses sign 13 deals covering 8 “promising sectors”
Saudi Arabia and US businesses have signed 13 investment agreements on the sidelines of American President Joe Biden to the Kingdom.
The business-to-business and government-to-business deals cover eight “promising sectors,” the Ministry of Investment of Saudi Arabia said, including energy, manufacturing, aerospace, healthcare, tourism, and education.
Saudi entities including the Royal Commission of Jubail and Yanbu signed deals with top US firms such as Boeing Aerospace, Raytheon Defense Industries, Medtronic and Digital Diagnostics, and IKVIA.
“Our relationship with US companies has continued to evolve and serve both countries as well,” Saudi investment minister Khalid Al Falih said.
He added: “As of today, more than 740 US companies are registered as foreign enterprises doing business in the Kingdom, employing over 67,000 people.
This happens on the back of the Kingdom’s massive plans to diversify its economy. Last year, Saudi Crown Prince Mohammed bin Salman announced the National Investment Strategy, aiming to attract $103.47 billion in foreign direct investments.
A huge part of the diversification strategy is to boost local industries, and ultimately raise the private sector’s contribution to Saudi Arabia’s gross domestic product.
Other agreements signed during Biden’s visit include the Artemis Accords between the Saudi Space Authority and NASA, which would allow both to jointly launch Mars and Moon explorations.
Saudi Arabia sets up steering committee for implementing sustainable development goals
Saudi Arabia has formed a Steering Committee for Sustainable Development (SCSD) comprising 18 government entities as members to oversee the implementation of the UN-mandated sustainable development goals (SDGs) in the country, a senior minister said.
“The SCSD will be responsible for mainstreaming the thinking around the SDGs into policymaking, improving the country’s economic performance and social development, and enhancing its local capabilities and knowledge,” Saudi Arabia’s minister of economy and planning, Faisal Alibrahim, said.
The minister was speaking at the UN High-Level Political Forum (HLPF) meeting in New York on Wednesday.
Alibrahim also urged member nations to invest in youth as it holds the key to unlocking sustainable socioeconomic growth.
“As the world seeks to build back stronger from the Covid-19 pandemic amid increasing geopolitical and socioeconomic uncertainty, a concerted effort to find common ground and focus on delivering sustainable development for all is urgently needed,” Alibrahim said in a virtual address to the forum.
Alibrahim said: “Saudi Arabia is working to put sustainable development at the heart of its evolving economy. We remain determined to continue working closely with the international community to proactively contribute to achieving our shared global goals, because we recognise that no one nation will develop sustainably, until all nations are enabled to develop sustainably.”
He pointed out that in June this year, his ministry signed the UN Sustainable Development Cooperation Framework 2022-2026 to further strengthen its partnership with the UN on achieving SDGs in Saudi Arabia.
Regarding the five Sustainable Development Goals (SDGs) in focus at this year’s High-Level Political Forum meeting, Alibrahim said of SDG4 – access to education – that the Kingdom was committed to continuously investing in the education of the country’s burgeoning youth demographic.
He said the Saudi government has allocated SAR185 billion of the 2022 budget for education, representing 19 percent of the total spend – the biggest share of the entire government budget for the year.
As for the goal related to gender equality, the minister said Saudi Arabia has already surpassed a 30 percent target rate of female labor force participation by 2030, putting it ahead of schedule on critical socioeconomic development matters.
The UN Economic and Social Council organizes the annual HLPF to follow up on national and global progress on the 17 SDGs outlined in the 2030 sustainable development agenda.
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