| SAUDI ECONOMY GETS FRESH BOOST WITH SAR1TRN BUDGET |
The Saudi economy was driven by wholesale and retail trade, which expanded 8%, while finance, insurance, real estate and business services grew 6.28% in the third quarter, according to latest available data from the General Authority for Statistics.
On the whole, the economy declined 0.46% in the third quarter from a year earlier, as Saudi Arabia complied with the Organisation of Petroleum Exporting Countries (OPEC) production cut, government data showed.
The data came after the Saudi government in its 2020 budget slashed its forecast for economic growth to 0.4% in 2019 from 0.9%, with growth hit by lower oil prices and reduced crude production agreed b OPEC nations and producers outside the exporting group.
However, the temporary blip will not impact the kingdom’s long-term growth prospects, which remain promising, especially as it embark on a transformative path of restructuring.
The SAR 1 trillion 2020 budget aims to jumpstart economic activity and build on the progress made as part of the Saudi Vision 2030 initiative.
The government has set out firm goals for the 2030 vision while maintaining financial and economic stability as an essential pillar of sustainable economic growth.
"The financial and economic results and indicators confirm that we are positively making progress and we are constantly reviewing and updating the implemented policies, procedures, and programmes to ensure their effectiveness and correct their course whenever need arises in order to achieve the goals of the vision with taking into consideration the global financial and economic conditions and what is in the interest of the homeland and citizen," HRH the Crown Prince said as the government unveiled the 2020 budget.
The government plans to launch 20 projects this year in partnership with the private sector. These projects will focus on water, sanitation, education and health sectors, and privatisation of a number of services, in an effort to reduce the burden on public finances and raise efficiency in the private sector, according to Mohammed bin Abdullah Al-Jadaan, the ister of finance.
"We reaped the benefits of the spending efficiency programme, as a result of which there was an abundance of government expenditures during the year in which we achieved control of deficit levels in the economic side, and there was very significant support and empowerment for the private sector, which contributed to the sector's massive demand for infrastructure projects that were proposed by the government in the mining, water, energy and wastewater treatment sector,” the minister said. “This has resulted in a reduction in the level of government spending and the promotion of non-oil GDP growth well, especially with regard to the growth of GDP for the private sector.”
NEW TRADE CONDUITS
The kingdom is also investing heavily in boosting its infrastructure, which will help accelerate trade and economic activity.
In December, the government’s Supervisory Committee for Privatization of Transport Sector approved the signing of concession contracts with port operators DP World and Red Sea Gateway Terminal (RSGT), to develop and operate the container terminals at the Jeddah Islamic Port. The project will activate a memorandum of understanding signed by the Saudi Ports Authority (Mawani) last February.
“The concession contracts are anticipated to have direct positive impact on the Saudi economy through increasing the level of investments and ensuring the adoption of international best practices in ports’ operations,” the companies said. “Additionally, they are expected to create numerous direct jobs within the ports and the logistical services sectors, as well as indirect job opportunities through other relevant sectors within the supply chain.”
Saudi Arabia’s non-oil private sector also continued to see robust activity and is anticipating more growth in 2020. The latest purchasing managers’ index from Markit shows Saudi Arabia's non-oil private sector remained on a solid footing in December. Business activity, new orders and employment all expanded since the previous month.
“Total new business volumes increased sharply in December, but the pace of expansion moderated from the four-and-a-half year peak seen during November,” Markit said.
Employment numbers increased for the ninth consecutive month across the non-oil private sector, albeit at only a marginal pace, Markit noted. “Greater staff recruitment partly reflected rising pressure on business capacity, as suggested by a renewed increase in backlogs of work at the end of 2019.”
The joint exercise will contribute to building a mechanism for direct communication and control of risks between the relevant units in both countries during emergency times, as well as the sharing of expertise, knowledge and experience on supply chain security and risk management," the two countries said.
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