Harnessing the Sun: Saudi Arabia’s solar revolution

Harnessing the Sun: Saudi Arabia’s solar revolution
Saudi Arabia’s National Renewable Energy Program sees the Kingdom aiming for a solar energy capacity of 40 gigawatts by 2030. Above, the solar plant in Uyayna, north of Riyadh on March 29, 2018. (AFP file photo)
Short Url
Updated 21 December 2024
Follow

Harnessing the Sun: Saudi Arabia’s solar revolution

Harnessing the Sun: Saudi Arabia’s solar revolution

RIYADH: Saudi Arabia is a world leader when it comes to extracting energy sources from the ground, but it is the Kingdom’s drive to harness a power supply in the sky that is attracting attention.

Favorable government policies, a shift to meeting energy demands through renewable power, and a reduced dependence on fossil fuels are all factors pushing forward the Kingdom’s solar industry.

The ambitious target of Saudi Arabia’s National Renewable Energy Program sees the Kingdom aiming for a solar energy capacity of 40 gigawatts by 2030, promising significant opportunities for the market in the years to come.

According to market research firm Mordor Intelligence, the Kingdom’s solar market is projected to achieve a compound annual growth rate of 51 percent between 2024 and 2029 as a host of facilities come online.

However, challenges lie ahead with the rise of alternative clean energy sources like wind and the continued availability of fossil fuels potentially hindering solar energy market growth.

Solar technologies deployed in Saudi Arabia to maximize energy efficiency 

According to Christopher Decker, partner in energy and natural resources at Oliver Wyman, India, Middle East and Africa, Saudi Arabia is at the forefront of innovative solar technologies aimed at maximizing energy efficiency and sustainability in the region.

“One notable advancement is the Dumat Al-Jandal Concentrated Solar Power plant, which harnesses solar energy to heat liquid for thermal energy storage, enabling energy availability even when sunlight is not present,” he said.

“Additionally, the Sakaka Solar Plant employs bifacial solar panels that take advantage of the reflectivity of the surrounding sand, significantly enhancing solar efficiency. To maintain optimal performance, projects like the Noor Energy 1 plant in NEOM have implemented waterless robotic cleaning technologies, which not only ensure high efficiency but also reduce operational costs,” Decker added.

The Oliver Whyman official went on to note that the integration of smart grids and artificial intelligence technologies allows for the optimization of solar energy generation by predicting energy demand and forecasting weather patterns, thereby minimizing waste.

“Lastly, the NEOM Green Hydrogen initiative exemplifies the use of solar power to produce green hydrogen and subsequently green ammonia, showcasing a commitment to sustainable energy solutions. Together, these technologies position Saudi Arabia as a leader in solar innovation, driving the transition toward a more sustainable energy future,” Decker said.

Solar technologies globally have reached a high degree of maturity and the cost reductions are driven by the growing efficiency of solar cells as well as economies of scale.

According to Adnan Merhaba, partner and energy and utilities practice lead at Arthur D. Little Middle East, these incremental innovations have also made their way into Saudi Arabia and some developers have proposed additional developments, such as bifacial solar cells, that can further enhance yields.

“Saudi Arabia, a leader in water desalination technology, is also pioneering solar desalination to enhance sustainability. Furthermore, research institutes in KSA are investing in the next generation of higher efficiency solar cells such as tandem perovskite cells that can achieve a step change for efficiency gains,” Merhaba said.

The King Abdullah University of Science and Technology is a prime example of the growing solar industry in Saudi Arabia.




Stefaan De Wolf, KAUST professor material science and engineering. (Supplied)

According to Stefaan De Wolf, professor of material science and engineering at the Physical Science and Engineering Division in the university, the institution is pioneering research and development in emerging photovoltaic technologies aimed at maximizing energy efficiency and sustainability.

“One of the key innovations we are advancing is the combination of perovskite and silicon PV, which significantly enhances solar power efficiency beyond traditional technologies. This hybrid approach has the potential to achieve ultra-high efficiency solar cells for even harsh environmental conditions of Saudi Arabia – high temperatures and dust,” De Wolf said.

“Additionally, we are exploring the development of bifacial solar panels, which can generate electricity from both sides, further improving energy yield. These innovations are designed to help Saudi Arabia not only maximize its solar energy potential but also contribute to the global advancement of sustainable energy solutions,” the professor added.

From his side, Qiaoqiang Gan, professor of material science and engineering at the same division, shed light on the fact that industry players are actively seeking advanced thermal management technologies to reduce the operational temperatures of PV systems installed in the Kingdom.

“This challenge is pressing for Middle Eastern countries due to the region’s high temperatures. Addressing this issue requires more reliable materials and devices on a microscopic level, as well as advanced thermal management strategies on an operational level,” Gan said.




Qiaoqiang Gan, KAUST professor of material science and engineering. (Supplied)

Shihab El-Borai, partner with Strategy& Middle East, noted that projects like the Sudair Solar PV exemplify Saudi Arabia’s commitment to cutting-edge technologies, incorporating bifacial panels and sun-tracking systems to maximize efficiency.

“Saudi Arabia is leveraging world-class innovations in solar energy to not only produce electricity but to create a sustainable model for the entire region,” El-Borai said.

“Companies like Mirai Solar are also making strides with multifunctional solar panels that harness diffused sunlight while providing variable shading. These innovations demonstrate Saudi Arabia’s ability to leverage cutting-edge technologies to reduce its carbon footprint and position itself as a global leader in solar energy,” he added.

Solar sector contribution to the Kingdom’s economic diversification and energy goals

The growth of Saudi Arabia’s solar energy industry is vital for the nation’s economic diversification and is in line with the goals of Vision 2030. Through the enhancement of solar power infrastructure, Saudi Arabia is catalyzing the emergence of fresh sectors, enticing international investments, and cultivating a culture of innovation.

“This growth not only supports local manufacturing and supply chains but also generates employment opportunities and enhances human capital development, positioning the Kingdom as a regional leader in renewable energy,” Decker from Oliver Wyman said.

“In terms of energy security, solar power contributes to a resilient and diversified energy mix. By incorporating advanced solar technologies, energy storage, and smart grids, Saudi Arabia can enhance the flexibility and stability of its electricity grid,” he added.

The Oliver Wyman partner continued to highlight that solar-powered initiatives, like green hydrogen production, ensure that the Kingdom adds an additional stream of energy exportation, tapping into new revenue streams while promoting environmental sustainability.

“This strategic expansion strengthens Saudi Arabia’s energy capabilities for the future,” Decker concluded in that regard.




Christopher Decker, Partner in Energy and Natural Resources at Oliver Wyman, India, Middle East and Africa. (Supplied)

Demand for power is ever increasing in the Kingdom, largely driven by economic and population growth as well as giga-scale developments across the country.

“The wide deployment of solar projects can also prop up adjacent sectors such as battery storage, smart grid technologies and green hydrogen production. From an energy security perspective, burning less hydrocarbons for domestic use frees up more oil for export, enhancing revenues for investment in economic diversification and also supports the Kingdom achieve its sustainability goals,” he added.

On KAUST’s behalf, De Wolf explained that by investing in renewable energy, particularly solar power, the Kingdom is reducing its dependence on fossil fuels and building a more sustainable and resilient economy.

As for Gan, he indicated that given its geographical location, Saudi Arabia has an abundance of solar energy, surpassing that of many developed countries – an evident advantage in terms of available sunlight as an energy source.

“However, high temperatures present a significant challenge, leading to overheating in semiconductor solar cells. To effectively implement PV systems in Saudi Arabia, it is essential to develop specialized solutions that fully account for the unique local weather and environmental conditions. Such solutions must aim to maximize the utilization of abundant solar energy while mitigating the adverse impacts on PV performance,” the professor said.

He further noted that developing these specialized solutions will require further research and development, presenting both opportunities and challenges in advancing energy security goals.

El-Borai from PwC noted that by shifting toward renewables, the Kingdom is securing a more stable and sustainable energy supply, which supports broader economic growth.

“The localization of renewable energy manufacturing is another critical component. Saudi Arabia is focusing on producing renewable energy components domestically, reducing import dependency and positioning itself as a hub for clean energy technologies. By localizing renewable energy production, Saudi Arabia is positioning itself as a hub for clean energy technology in the region, enhancing both economic growth and energy security,” he said.

“By 2030, Saudi Arabia aims to produce 1.2 million tonnes of green hydrogen annually, with solar energy powering the electrolysis process. This dual focus on solar and hydrogen is expected to drive further economic diversification and solidify the Kingdom’s leadership in green energy,” El-Borai added.

Challenges encountered in the Kingdom’s solar industry

The deployment of solar energy in Saudi Arabia faces significant challenges, particularly around localizing the value chain and addressing environmental factors such as high temperatures and dust.

From Decker’s perspective, Saudi Arabia faces several challenges in scaling up its solar energy capacity, two of which are infrastructure limitations and regulatory complexities.

“To address these challenges, Saudi Arabia is investing in modernizing its grid infrastructure through smart grid technologies and energy storage solutions, enabling better management of intermittent solar power. The government is working on streamlined regulatory processes and introducing incentive schemes, such as public-private partnerships and favorable tariffs, to encourage private sector investment, but there is still much to do in this area,” he added.

From Arthur D. Little Middle East’s side, Merhaba said that in order to meet its highly ambitious objectives by 2030, the Kingdom will have to overcome technical challenges, global supply chain issues due to increasing demands for solar cells, and supply concentrated largely in China.

There are also concerns around the disruptions in global trade, the localization and human capital needed to ensure development of a robust and competitive solar value chain industry in the Kingdom, and adequate supply of engineers and technicians to meet the growing demand in the sector.

The country has strong strategies and policies, including national industrial and localization plans, along with other initiatives, that are poised to help them tackle these obstacles effectively.

Saudi Vision 2030 impact on strategies for transitioning toward renewable energy sources

By 2030, Saudi Arabia aims to produce approximately 58.7 GW of renewable energy, with solar energy contributing 40 GW to this total.

On behalf of Oliver Wyman, Decker explained that in terms of establishing a regulatory framework to facilitate the development of renewable energy, Vision 2030 outlines the need for a supportive environment.

This involves creating policies that incentivize private sector participation through Power Purchase Agreements that guarantee long-term revenue for investors, subsidies and tariff reforms to make renewable energy more competitive, and streamlined licensing processes to reduce bureaucratic hurdles for solar projects. 

With regards to promoting private sector investment, Decker highlighted that the Saudi government is actively encouraging public-private partnerships and foreign direct investment to drive the growth of solar power projects. 

“The National Renewable Energy Program, launched under Vision 2030, is a key initiative that seeks to attract $30-$50 billion in investments for renewable energy projects,” he said.

In terms of maintaining a strong traditional energy sector while investing in diversification, Decker added: “While Vision 2030 emphasizes the transition to renewable energy, it also acknowledges the importance of maintaining a robust traditional energy sector, particularly oil and gas, which remain critical to the Kingdom’s economy.”

This comes as Saudi Arabia aims to optimize its oil and gas production through technological advancements and efficiency improvements to ensure the sector continues to generate revenue.

On behalf of Arthur D. Little Middle East, Merhaba highlighted that the Kingdom has undergone a pivotal shift in its economic and energy landscape in recent years.

“It ushered in the era of renewables and accelerated the deployment of solar. With a highly ambitious target to achieve 50 percent renewable adoption by 2030, which are under consideration for an upward revision, it has not only led to development of mega solar projects at record low prices, but also to build momentum in developing national champions across the solar value chain,” he said.

KAUST representative De Wolf reiterated the fact that the Vision has created a favorable climate for investment and development, with ambitious renewable energy targets shaping the future of the Kingdom’s energy mix.

Similarly, Gan emphasized that the Vision 2030 has created fertile ground for solar energy development, with policies that incentivize public-private partnerships and invest heavily in renewable energy infrastructure.

“This initiative aims to diversify the Kingdom’s energy mix by transitioning toward cleaner, more sustainable energy sources,” he said.

From PwC’s side, El-Borai explained that the National Renewable Energy Program is central to this.

“By 2060, Saudi Arabia aims to reach Net Zero status, supported by significant financial commitments, such as the planned $266 billion investment in cleaner energy sources, including solar,” he said.

“The Kingdom is actively developing projects with a capacity of 20 GW annually to meet its target of 100 GW to 130 GW of clean energy by 2030. This strategic framework also emphasizes localizing renewable energy manufacturing, with collaborations like the Public Investment Fund’s partnership with Chinese solar manufacturers to establish 30 GW of solar PV production capacity. The NREP is not just about generating clean energy — it’s about securing the Kingdom’s energy future and reducing its reliance on fossil fuels,” the PwC partner said.


Fintech sector transformation accelerating thanks to Vision 2030 reforms, analysts confirm

Fintech sector transformation accelerating thanks to Vision 2030 reforms, analysts confirm
Updated 17 January 2025
Follow

Fintech sector transformation accelerating thanks to Vision 2030 reforms, analysts confirm

Fintech sector transformation accelerating thanks to Vision 2030 reforms, analysts confirm

JEDDAH: Reforms across Saudi Arabia’s financial landscape have significantly transformed the sector, driven by the Financial Sector Development Program, experts have told Arab News.

One of the key initiatives of the Kingdom’s Vision 2030, the program aims to promote income diversification, enhance savings, and provide a range of financing and investment opportunities.

These reforms have been implemented under the close oversight of the Saudi Central Bank, known as SAMA, which has also played a crucial role in fostering the growth of fintech and digital banking through a supportive regulatory framework and various initiatives.

Speaking to Arab News, Yaseen Ghulam, associate professor of economics and director of research and consulting center at the Riyadh-based Al-Yamamah University, named five major reforms in Saudi Arabia’s financial sector that have had significant impact on the overall efficiency and competitiveness of financial institutions.

He noted that the FSDP, which was launched in 2017, has enhanced the Saudi Stock Exchange, or Tadawul, to become a globally competitive investment platform with robust market infrastructure.

Yaseen Ghulam, associate professor of economics and director of research and consulting center at the Riyadh-based Al-Yamamah University. Supplied

“The plan is to enhance trading infrastructure and settlement processes to meet international best practices, raising market capitalization, liquidity, and value to over $3 trillion, and facilitating the acquisition of money by overseas investors,” he said.

He added that this has led to greater online platforms, advanced fintech capabilities, integrated custody and clearing regimes, and greater investor rights, as well as increased alignment with sustainable finance norms, and improved transparency procedures.

He further added that Tadawul’s inclusion in the MSCI Emerging Markets Index in 2019 enhanced its standing as a global player.

Ghulam mentioned that fintech innovation has been a significant focus since the launch of the Fintech Saudi initiative in 2018, which has propelled Saudi Arabia toward becoming the leading hub for the sector in the region.

He added that by 2022, the program had helped the fintech ecosystem grow quickly, as seen by the establishment of many innovative businesses and the widespread use of digital payments.

“By enacting progressive laws, SAMA enabled this fintech revolution. In order to promote development, it built a regulatory sandbox for supervised testing of cutting-edge technologies, created specialist licenses for fintech businesses, and made banking infrastructure and application programming interfaces available,” he added.

This view was echoed by financial analyst Khalid Gaber Al-Zaidiy, who told Arab News that SAMA’s regulatory framework is key to the growth of fintech and digital banking in the Kingdom.

He added that some of the key impacts of this framework include encouraging innovation while maintaining financial stability.

“SAMA supports fintech innovation through initiatives like the Fintech Sandbox, enabling startups to develop and test products within a regulated environment,” he said.

By enforcing strict cybersecurity standards and regulations related to the protection of personal financial data, he added, SAMA enhances consumer trust in using fintech solutions. “This helps the sector grow sustainably and securely,” Al-Zaidiy said.

He added that by licensing new digital banks, SAMA fosters competition and supports digital economy growth, advancing the sector.

“The Central Bank’s policies promote financial inclusion and expand access to banking through digital solutions, creating opportunities for fintech companies,” the analyst added.

Green growth and international trust

Ghulam also highlighted the Kingdom’s commitment to green finance, stating that it has made strides in promoting environmentally friendly investments and projects in line with global sustainability trends.

This includes the issuance of green bonds as part of its Vision 2030 goals. “Saudi Arabia has positioned itself as a key player in the worldwide transition to a more environmentally responsible economic model through these proactive initiatives,” he said.

Ghulam emphasized that Saudi Arabia has implemented strategic policies to increase international investor participation, which has led to a record increase in foreign capital inflows and a boost in confidence in the Saudi financial system.

“Growing inflows reflect a global increase in trust in the stability of Saudi Arabia’s financial system,” he said.

He praised the establishment of the National Debt Management Center, adding that by creating specialized bodies to oversee the management of the country’s debt, Saudi Arabia has taken decisive action to improve public financial control and preserve a sound fiscal position.

Explaining how the rise of fintech and digital banking is reshaping customer expectations and experiences in the financial services industry, Ghulam stated that one of the most significant initiatives of the FSDP is the implementation of open and digital banking through fintech.

“As a result, Saudi Arabia is leading the fintech revolution, with over 226 fintech enterprises already in existence, due to its well-functioning telecommunication sector and heavy investment by government and telecom companies in infrastructure set up to bring higher speed and reliability of connections,” he said.

More importantly, the economist added, STC Bank, the Saudi Digital Bank, and the payment system of Sarie are leading the way in consumer digital banking and payment systems.

Ghulam further stated that digital banking saves customers time, reduces transaction costs, and fosters competition and economic growth.

“It is enhancing the financial sector by introducing new products and services for Saudi consumers and businesses. With consumer consent, these banking facilities allow third-party providers access to financial data, driving innovation in the industry,” he said, adding that digital wallets, smartphone apps, and online banking have become essential for managing accounts and transactions.

“Opening a bank account can now be done online, benefiting rural areas by eliminating the need for in-person visits. This shift has also improved financial inclusion by providing credit, insurance, and services to previously marginalized individuals and regions,” Ghulam said.

SMEs thriving

Highlighting how financial reforms are addressing the specific funding challenges faced by small businesses in Saudi Arabia, Ghulam noted that the Kingdom has over 1.3 million SMEs.

He noted that, like other developed countries, these companies face challenges in securing necessary financing due to collateral limitations and higher credit risk.

“The impetus for reforms in relation to SMEs funding has come from Vision 2030 and is related to FSDP. One of the main objectives of FSDP and related reforms is to amplify the financing of micro, SMEs within the banking system and to set up institutions such as SME Bank, Monsha’at, and Venture Capital companies to help improve thefinancing and ecosystem,” he said.

He noted that the FSDP aims to expand the current 10 percent ratio of SMEs financing in the banking system to 11 percent by 2025.

More importantly, to show its continued and strong support for these businesses, he said, the government is recommending that financial institutions devote 20 percent of their loan portfolios to this industry.

“Monsha’at has introduced several schemes in this regard. These include Funding Gate, an online one-stop-shop for financing, aggregating lenders and services, KAFALAH program, a loan guarantee service to help reduce risk and increase appetite for lenders, and Saudi Venture Capital Co., as well as Esterdad Initiative, and loans facilitated through the Indirect Lending Initiative,” he said.

The academic added that the fintech revolution resulting from reforms is also helping increase funding for SMEs in this regard, saying: “B2B FinTech solutions are highly sought after as they solve issues with credit availability, payment processing, and money management.”

Ghulam further said that the Public Investment Fund is also helping improve SMEs funding, along with oil giant Saudi Aramco’s Taleed program which offers more than SR3 billion in funding to eligible firms.

“All these varied funding channels would have not been possible without reforms and government push to help the smaller businesses that are the backbone of the future Saudi economy that is less reliant on fossil fuel income,” the economist said.

With capital of over SR3 billion, the Taleed Program targets sustainable growth of SMEs (File/AN)

The establishment of the Financial Literacy Entity within the FSDP is a key strategy in Saudi Arabia’s efforts to boost financial literacy and promote digital banking, aligning with Vision 2030’s goals.

“Several fintech businesses, such as Darahim and Fatafeat, are attempting to increase financial literacy in the Kingdom. In a significant step, the Saudi Ministry of Education mandated the inclusion of a ‘Financial Knowledge’ course in school curricula,” Ghulam said.

He further said that Thameen and Smart Investor, two awareness efforts run by the Capital Market Authority, are targeted at the financial literacy of adults and young people, respectively.

“A 2023 report from the SAMA states that citizens’ financial literacy has increased due to these activities. These policies are indeed bearing fruit: as of 2023, 38 percent of adults were estimated to have a basic understanding of financial concepts, up from 30 percent in 2021,” the academic said.


Saudi corporate lending sees highest growth in 2 years as bank loans reach $782bn

Saudi corporate lending sees highest growth in 2 years as bank loans reach $782bn
Updated 17 January 2025
Follow

Saudi corporate lending sees highest growth in 2 years as bank loans reach $782bn

Saudi corporate lending sees highest growth in 2 years as bank loans reach $782bn

RIYADH: Saudi Arabia’s bank loans surged to SR2.93 trillion ($782 billion) in November, marking a 13.33 percent year-on-year increase — the highest growth rate in 22 months.

According to figures from the Saudi Central Bank, also known as SAMA, corporate loans were the main driver, surging 17.28 percent to SR1.58 trillion.

This marks the highest annual growth for corporate loans among the lending activity data available in SAMA’s reporting since 2021.

Real estate activities led the charge, representing 21 percent of corporate lending and growing by 32 percent to SR328 billion.

Wholesale and retail trade accounted for 13 percent of corporate lending, reaching SR201.6 billion with an annual growth rate of 10.62 percent.

The manufacturing sector, a key component of Vision 2030’s economic diversification goals, represented 12 percent share at SR182.44 billion.

Electricity, gas, and water supplies contributed 11 percent to the total corporate share, growing significantly by nearly 27.74 percent to reach SR178.56 billion.

Notably, professional, scientific, and technical activities, though holding a smaller 0.53 percent share of corporate credit, witnessed the most significant surge, with a 54.44 percent annual growth rate to SR8.38 billion.

Education loans followed real estate with the third-highest growth rate, increasing by 29.93 percent to SR8 billion.

On the personal loans side, which includes various financing options for individuals, the sector grew 9.05 percent annually to SR1.35 trillion. This expansion underscores the continued confidence in consumer lending and the Kingdom’s economic diversification strategies.

According to Standard Chartered’s Global Market Outlook for 2025, lower interest rates are expected to boost private sector growth, particularly benefiting borrowing-sensitive industries in Saudi Arabia, the UAE, and Qatar.

The report highlighted that despite a forecasted slowdown in global growth from 3.2 percent to 3.1 percent, the Gulf Cooperation Council is poised to remain a bright spot, driven by robust non-oil sector expansion and strategic investments that support economic diversification.

Saudi Arabia’s economic transformation under Vision 2030 exemplifies a coordinated effort across government institutions, financial sectors, and private enterprises to drive sustainable growth and diversification.

Sectors like education, science and technology, and utilities are gaining significant momentum, fueled by substantial funding aimed at enhancing their contribution to the nation’s GDP.

The Kingdom is making significant investments in research and development, with the government accounting for the largest share of expenditure. 

In 2025, education represented 16 percent of the national budget, employing the highest percentage of R&D workers and underscoring its pivotal role in expanding research capabilities.

Additionally, the surge in real estate activity reflects the broader infrastructure and giga-projects in progress, reinforcing the nation’s development agenda.

Recent shifts in global monetary policy, mirrored by the Saudi Central Bank’s interest rate adjustments in line with the US Federal Reserve, are set to make borrowing more affordable.

Lower interest rates will further stimulate lending, supporting key industries and accelerating the Kingdom’s ambitious transformation.

Strong capital buffers

According to data from SAMA, Saudi banks’ regulatory capital to risk-weighted assets stood at 19.2 percent in the third quarter of 2024, down slightly from 19.5 percent a year earlier.

Despite this modest decline, the ratio remains well above the Basel Committee on Banking Supervision’s minimum requirement of 8 percent, reflecting the strong capitalization and financial resilience of the Kingdom’s banking sector.

The Tier 1 capital ratio, which measures the core capital banks hold to absorb losses relative to their risk-weighted assets, reached 17.7 percent.

Tier 1 capital primarily consists of high-quality capital such as common equity and disclosed reserves. This high ratio demonstrates the soundness of the banking system in supporting economic growth while safeguarding against potential risks.

According to a study by the International Monetary Fund, Saudi banks are well-capitalized, profitable, and resilient to severe macroeconomic shocks.

Solvency stress tests and sensitivity analyses indicate their ability to withstand adverse scenarios, including significant downturns in real estate prices and sectoral loan portfolio defaults.

While banks demonstrate sufficient capacity to handle liquidity shocks, the report highlighted the need to address funding concentration risks.

The IMF noted that SAMA is refining its stress-testing methodologies and recommended enhancing data collection and monitoring large funding and credit exposures, particularly in relation to major construction and infrastructure projects.

To further strengthen credit risk modeling, SAMA should incorporate granular data on households and nonfinancial corporations, reflecting the evolving dynamics of the Kingdom’s economic transformation, according to the IMF.

SAMA data for the third quarter of 2024 indicated that non-performing loans net of provisions to capital fell to 2.1 percent, down from 2.2 percent in the same period last year.

This decline suggests an improvement in the quality of bank lending portfolios and the effectiveness of provisioning strategies.

According to the IMF, several factors help mitigate credit risk within the rapidly expanding real estate loan portfolio in Saudi Arabia.

Most mortgages are offered at fixed rates, which shield borrowers from interest rate fluctuations, and are structured with full recourse, minimizing the likelihood of strategic defaults.

Additionally, approximately 80 percent of retail borrowers are government employees, whose income is likely to remain stable during economic downturns. Furthermore, it is reported that the majority of mortgages are salary-assigned, providing further assurance of repayment.


Oil Updates — crude set for 4th week of gains as investors assess US sanctions impact

Oil Updates — crude set for 4th week of gains as investors assess US sanctions impact
Updated 17 January 2025
Follow

Oil Updates — crude set for 4th week of gains as investors assess US sanctions impact

Oil Updates — crude set for 4th week of gains as investors assess US sanctions impact
  • Brent up 2.3 percent so far this week, WTI adds 3.3 percent
  • China GDP tops forecast, but oil refinery output declines in 2024

LONDON, Jan 17 : Oil prices edged up on Friday, heading for a fourth consecutive week of gains, as the latest US sanctions on Russian energy trade heightened expectations for oil supply disruptions.

Brent crude futures were trading up 36 cents or 0.4 percent higher at $81.65 per barrel by 2:13 p.m. Saudi time, having gained 2.4 percent so far this week.

US West Texas Intermediate crude futures were up 53 cents or 0.7 percent at $79.21 a barrel, having climbed 3.5 percent for the week.

Last Friday, the Biden administration unveiled broader sanctions targeting Russian oil producers and tankers.

“Supply concerns from US sanctions on Russian oil producers and tankers, combined with expectations of a demand recovery driven by potential US interest rate cuts, are bolstering the crude market,” said Toshitaka Tazawa, an analyst at Fujitomi Securities.

“The anticipated increase in kerosene demand due to cold weather in the United States is another supportive factor.”

Investors are also anxiously waiting to see if more supply disruptions will emerge after Donald Trump returns to the White House next Monday.

“Mounting supply risks continue to provide broad support to oil prices,” ING analysts wrote in a research note, adding that the new Trump administration is expected to take a tough stance on Iran and Venezuela, the two main suppliers of crude oil.

Expectations for better demand lent some support to the oil market. Data showed inflation easing in the US, the world’s biggest economy, bolstering hopes of interest rate cuts.

Traders are also assessing fresh data from China, the world’s top oil importer. Its economy fulfilled the government’s ambitions for 5 percent growth last year.

But China’s oil refinery throughput in 2024 fell for the first time in more than two decades, except for the pandemic-hit year of 2022, government data also showed on Friday.

Weighing on oil prices were expectations of a halt in attacks by Yemen’s Houthi militia on ships in the Red Sea in the wake of a Gaza ceasefire deal.

The Houthis’ attacks have disrupted global shipping, forcing ships to make longer and more expensive journeys around southern Africa for more than a year.

The Israeli cabinet is set to approve a deal with militant group Hamas for a ceasefire in Gaza, Prime Minister Benjamin Netanyahu’s office said on Friday.


Chief economists expect global economic conditions to weaken in 2025

Chief economists expect global economic conditions to weaken in 2025
Updated 16 January 2025
Follow

Chief economists expect global economic conditions to weaken in 2025

Chief economists expect global economic conditions to weaken in 2025

DUBAI: More than half of chief economists expect economic conditions to weaken in 2025, according to a World Economic Forum report released on Thursday.

“The growth outlook is at its weakest in decades and political developments both domestically and internationally highlight how contested economic policy has become,” said Aengus Collins, head of Economic Growth and Transformation at the WEF.

The outlook is more positive in the US, with 44 percent of chief economists predicting strong growth in 2025, up from 15 percent last year. However, 97 of respondents in the “Chief Economists Outlook” report said they expected public debt levels to rise, while 94 percent forecast higher inflation.

Europe, on the other hand, remains the weakest region for the third consecutive year, with 74 percent of economists expecting weak or very weak growth.

In the Middle East and North Africa region, 64 percent expect moderate growth while a quarter expect weak growth.

Collins said the global economy was under “considerable strain,” worsened by increasing pressure on integration between economies.

A total of 94 percent of economists predict further fragmentation of goods trade over the next three years, while 59 percent expect the same for services trade. More than 75 percent foresee higher barriers to labor mobility and almost two-thirds expect rising constraints on technology and data transfers.

The report suggests that political developments, supply chain challenges and security concerns are critical factors that will likely drive up costs for both businesses and consumers over the next three years.

Businesses are expected to respond by restructuring supply chains (91 percent), regionalizing operations (90 percent), focusing on core markets (79 percent) or exiting high-risk markets (76 percent).

When the economists were asked about the factors contributing to current levels of fragmentation, more than 90 percent pointed to geopolitical rivalries.

This is largely due to the “strategic rivalry” between the US and China, according to the report, along with other geopolitical disturbances, particularly in Ukraine and the Middle East.

Global fragmentation is likely to result in a more strained global landscape with chief economists expecting an increase in the risk of conflict (88 percent), a more bipolar system (79 percent) and a widening divide between the Global North and South (64 percent).

“In this environment, fostering a spirit of collaboration will require more commitment and creativity than ever,” Collins said.


Australian-Saudi Business Council hosts joint forum to help boost trade

Australian-Saudi Business Council hosts joint forum to help boost trade
Updated 16 January 2025
Follow

Australian-Saudi Business Council hosts joint forum to help boost trade

Australian-Saudi Business Council hosts joint forum to help boost trade
  • Event brought together more than 35 participants from both nations to discuss key opportunities for trade and investment

RIYADH: The Australian-Saudi Business Council hosted a joint forum on Thursday to discuss the enhancement of collaboration and trade between the two countries.

Led by Daniel Jamsheedi, the council’s country director, the event brought together more than 35 participants from both nations to discuss key opportunities for trade and investment.

The event, a collaboration with the Federation of Saudi Chambers, aimed to build on the success of the first Australian Pavilion at the Future Minerals Forum in Riyadh this week, and further strengthen the economic partnership between the two countries, organizers said.

Sam Jamsheedi, the president of the council, thanked the federation for the vital role it played in the success of the forum.

“The Federation of Saudi Chambers is one of our key stakeholders and our partner within the Kingdom,” he said.

“As a business council, we appreciate the efforts put in to enable this joint business forum to succeed.”