Executive Summary
Saudi Arabia’s economy has continued its robust trajectory into Q1 2024, as detailed in the latest Economic and Investment Monitor. This report highlights significant developments across various economic sectors, underscoring the Kingdom’s strategic initiatives and investment potential.
Global Economic Context
The International Monetary Fund (IMF) projects global growth at 3.2% for 2023, maintaining the same rate through 2025. Despite geopolitical tensions and the lingering effects of the COVID-19 pandemic, advanced economies are expected to grow by 1.7% in 2024, while emerging markets and developing economies are projected to grow by 4.2%. The Global Supply Chain Pressure Index (GSCPI) indicated a reduction in global supply chain pressures, reflecting improved transportation and manufacturing conditions globally.
Saudi Economic Performance
Saudi Arabia’s economy is poised for a 2.6% GDP growth in 2024, increasing to 6.0% in 2025, making it one of the fastest-growing G20 economies. This growth is driven by significant advancements in non-oil sectors and strategic reforms aligned with Vision 2030. The Kingdom’s economic resilience is also reflected in the stability of its key financial indicators, including a 17.1% YoY increase in the Tadawul All Share Index (TASI) in Q1 2024.
Inflation and Consumer Prices
Inflation rates in advanced economies are projected to decline to 2.6% in 2024, with Saudi Arabia’s Consumer Price Index (CPI) averaging 1.7% in Q1 2024. This decline is attributed to reduced prices in housing, water, electricity, gas, and other fuels. The Wholesale Price Index (WPI) also saw a modest increase of 3.7%, driven by higher costs of transportable goods and food products.
Investment and Capital Markets
Foreign Direct Investment (FDI) inflows into Saudi Arabia grew by 32% YoY in Q4 2023, reaching SAR 19 billion. The total FDI stock rose by 6.1% in 2023, underscoring the successful investment climate fostered by ongoing reforms. The Kingdom also saw a significant rise in investment licenses, with a 93% increase in Q1 2024 compared to the previous year.
Sectoral Highlights
- Real Sector: Despite a 10.6% decline in oil activities, non-oil activities and government activities rose by 2.8% and 2.0%, respectively. This diversification is crucial for long-term economic stability.
- Monetary Sector: Money supply grew by 8.3% YoY in Q1 2024, driven by a significant rise in time and savings deposits. The Saudi Arabian Interbank Offered Rate (SIBOR) increased to 6.2%, reflecting tighter monetary conditions.
- Labor Market: Unemployment among Saudis decreased to 7.7% in Q4 2023, moving closer to the Vision 2030 target of 7.0%. This improvement is attributed to increased female participation and stable employment rates among Saudi males.
Graphical Insights
Global Supply Chain Pressure Index (GSCPI)
Saudi Arabia GDP Growth Projections
(2017 to 2023)
Foreign Direct Investment Inflows
Unemployment Rates
Investment Licenses in Q1 2024
Strategic Initiatives and Future Outlook
The Saudi government continues to implement key initiatives to enhance the investment environment. The National Investment Strategy (NIS) aims to boost private sector contributions to GDP to 65% by 2030 and increase non-oil exports significantly. Key legislation and efforts to attract regional headquarters have been pivotal in these advancements.
Conclusion
Saudi Arabia’s Q1 2024 economic performance highlights the Kingdom’s strategic resilience and growth potential. With continuous efforts to diversify the economy and improve the investment landscape, Saudi Arabia is well-positioned to achieve its Vision 2030 goals. The future outlook remains optimistic, supported by strong policy frameworks and robust sectoral growth.
Note: The graphs and data points are extracted and synthesized from the “Economic and Investment Monitor, Saudi Arabia Q1 2024” report for a comprehensive visualization of economic trends and projections.
J K Management Consultancies Ministry of Investment Ministry of Tourism of Saudi Arabia Ministry of Commerce – Saudi Arabia #SaudiLicense #Businessin Saudi Jassim Karadan J K
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