TRADE

RENEWED ECONOMIC OPTIMISM GIVES SAUDI TRADE FRESH BOOST

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Saudi Arabian exports had their best showing in 12 months, rising to SAR 71.9 billion in January, according to the kingdom’s statistical agency.

The country’s merchandise exports rose steadily in each of the past five months, as domestic economic activity improves and the global economy showed signs of resiliency after the pandemic temporarily shut down many businesses.

Despite the gains, the January 2021 figure was 13.4% lower compared to the same period in 2020.

Not surprisingly, oil exports fell 20.5% during the month given the kingdom’s self-imposed curtailments on oil exports, according to the General Authority for Statistics (GASTAT).

But non-oil exports surged 15.6% year on year in January 2021 to reach SAR 18.9 billion from SAR 16.3 billion in January 2020. Among the non-oil exports, plastics and rubber products were up 24.5% and chemical and allied products grew 3.3% versus January 2020 figures.

Meanwhile, merchandise imports posted a 20.7% year-on-year growth in January with SAR 47.9 billion, compared to SAR 39.7 billion last year.

“This increase was due to the increase in many sectors compared to January 2020, mainly arms and ammunition; parts and accessories thereof (524.9%) and base metals and articles of base metal (17.9%),” GASTAT said. “Imports also increased compared to the previous month (December 2020), by SAR 3 billion or 6.8%.”

GLOBAL REBOUND

The figures are in line with the uptick in global trade. The World Trade Organization (WTO) expects global trade to rise 8% in 2021 after having contracted 5.3% in 2020.

“The strong rebound in global trade since the middle of last year has helped soften the blow of the pandemic for people, businesses, and economies,” WTO director-general Ngozi Okonjo Iweala said in a statement. “Keeping international markets open will be essential for economies to recover from this crisis and a rapid, global and equitable vaccine roll-out is a prerequisite for the strong and sustained recovery we all need.”

Indeed, prospects for Saudi trade flows look promising going forward. Saudi Ports Authority, or MAWANI, said it handled 572,000 containers last year, a 3.6% increase over the previous months, while transhipments rose 16.16%.

The ports also reported a 2.23% increase in the total amount of cargo, compared to the same period of the previous year, which reached more than 20 million tonnes, coming on board 894 ships, MAWANI noted. 

TRADE POLICY REVIEW

The WTO lauded the kingdom’s progress in boosting its trade and investment framework, during a review of its policies. As many as 44 Saudi government agencies took part in the meetings.

The WTO said the kingdom is a strong supporter of multilateral trading system and praised its leadership during the G-20 summit last year, which focused on trade and investment in the midst of the worst health and economic crisis faced by the world.

“They (WTO directors) applauded Saudi Arabia in particular for initiating and advancing the Riyadh Initiative on the Future of the WTO aiming at discussing and reaffirming the principles of the WTO and its reform,” according to concluding remarks by the WTO after the review ended in March. “Members also took note of the kingdom's ratification of the TFA, and its active participation in ongoing discussions such as the fisheries negotiations and the four Joint Statement Initiatives of e-commerce, Domestic Services Regulation, Investment Facilitation, and MSMEs.”

GCC-CHINA TIES

In another move that could transform trade flows in Saudi and the wider GCC region, the Gulf Co-operation Council resumed its free trade talks with China.

The meetings took place in Riyadh in March, between Chinese state councilor and foreign minister Wang Yi and GCC secretary general Nayef bin Falah Al-Hajraf.

“Wang stressed China's keenness to elevate the level of the bilateral ties and deepen mutual support and co-operation in all aspects, on the basis of mutual respect and support,” according to Chinese state-owned news agency Xinhua.

The Chinese diplomat said he hoped for an early conclusion of the free trade talks, which could help accelerate the GCC states’ economic revival after the pandemic took a toll on the regional economy.

Saudi Arabia’s focus on forging closer trade ties with the East goes beyond China.

In January, the kingdom’s National Debt Management Centre (NDMC) signed a memorandum of understanding with Japan’s Nippon Export and Investment Insurance (NEXI) to expand the opportunities of financing government projects being developed by Japanese companies in Saudi Arabia.

NEXI will provide new financing solutions through innovative financing structures of export credit loans, and by providing support in a manner tailored to the projects.

The NDMC also signed a similar agreement with the Korea Trade Insurance Corporation (K-SURE) to facilitate financing for South Korean companies working on developments in the kingdom.