| Saudi Arabia’s trade surplus stood at SAR 12.77 billion at the end of September, an impressive figure given the scale of slowdown in global trade.
The kingdom’s exports in the third quarter reached SAR 161.8 billion, increasing by nearly 39% compared to the previous quarter, according to the latest data from the Saudi General Authority for Statistics (GSTATS).
However, imports were almost flat during the period compared to the second quarter, reaching SAR 117.19 billion, as the government focused on domestic content to accelerate local economic activity.
The figures suggest an upturn in trade activity after a tumultuous downturn in global trade as the world economy came to a halt amid lockdowns and rising coronavirus cases.
But Saudi trade data suggests green shoots of recovery are under way.
World Trade Organization’s (WTO) latest data shows the third quarter of 2020 suggested a rebound is under way, with global trade in manufactured goods, led by electronics, textiles and automotive products, as production resumed and lockdown measures were eased in major economies.
“By contrast, services trade remained depressed, down 17% year on year in September after registering declines of 23% in July and 22% in August compared to the same months in the previous year,” the WTO said in its December report, noting that the estimates covered 39 economies.
BOOSTING FDI AND TRADE
Saudi Arabia is looking at new ways to boost trade and investment in the kingdom, through the development of new hubs.
“Saudi Arabia’s economy is resilient - our credit rating has been maintained during the onset of the pandemic,” said Khalid Al Falih, minister of investment, at an international summit in late October. “We have proven to the private sector and our people that we can look after them first. With 27 reformed regulations being currently addressed by the government and a plan for Special Economic Zones in development, Saudi Arabia is on its way to recovery.”
The minister said the kingdom’s Vision 2030 is the blueprint that will drive foreign direct investment and consequently trade.
“We are focusing on leveraging the kingdom’s qualitative, competitive advantages and building sectors that are anchored in knowledge, research and innovation,” said Al Falih at the Global Digital Summit Series, organised by the Financial Times Live and co-hosted by the Ministry of Investment of Saudi Arabia and G20 Saudi Secretariat as part of G20’s International Conferences Program.
Before the pandemic, Saudi Arabia has embarked on a number of reforms that are expected to make a positive impact on the kingdom’s trade and investment.
“The process of legislative and regulatory reform that has altered the nation’s trading and investment landscape in recent years is expected to continue to long-term benefit,” according to the Oxford Business Group. “The government’s goal, according to Vision 2030, is to rank within the top-20 countries on the World Bank’s ease of doing business index – a feat that will require additional revision and innovation in the decade to come.”
IRAQ TIES
Saudi Arabia is also making concerted efforts with regional trade partners, many of which are in a promising stage of their own economic development.
The kingdom said it had agreed with neighbouring Iraq to open the Jadidat Arar border in the north for trade and investment, and will also establish a Saudi commercial attaché in Baghdad soon.
“The two sides agreed on a joint work plan, and endeavour to start implementing the provisions of the Greater Arab Free Trade Area agreement bilaterally between the two brotherly countries, and to form a joint business council,” the two countries said in a joint statement.
Saudi companies have been invited to invest in Iraq, in many sectors including naval, rail link and reactivation of air flights, said Saudi minister of transport Eng. Saleh bin Nasser Al-Jasser.
Activation of the Iraqi Um Qasser seaport maritime route with a host of Saudi seaport was also discussed, Al-Jasser said.
In addition, the two countries pledged to boost bilateral co-operation in various fields, including security, trade, investment and tourism.
Saudi Arabia shipped goods worth USD 677.9 million to Iraq in 2019, led by aluminium, electrical equipment, food and dairy products, according to the International Trade Centre. Iraq’s exports to the kingdom stood at USD 5.3 million.
To boost trade flows, the chairman of the Saudi-Iraqi Business Council at the Council of Saudi Chambers (CSC) Eng. Mohammed Al-Khorayef stated that the two countries are discussing a proposal to establish a commercial exchange area at Jadidat Arar port, exploring new investment opportunities and an initiative to register 100 Saudi companies in Iraq. |
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