Closing Bell: Saudi main index closes higher as key stocks gain

RIYADH: Saudi Arabia’s economy is poised for substantial growth, with its gross domestic product projected to increase from 1.2 percent in 2024 to 3.8 percent in 2025.

The projection by the Organisation for Economic Cooperation and Development comes amid global economic uncertainties, as many advanced economies are expected to face sluggish growth due to escalating trade tensions, geopolitical instability, and inflationary pressures.

This forecast signals a turnaround for the Kingdom, positioning it as one of the fastest-growing economies within the G20 in the coming years. While Saudi Arabia’s GDP growth is expected to moderate slightly to 3.6 percent in 2026, global GDP growth is projected to slow to 3.1 percent in 2025 and 3 percent in 2026.

Stable inflation

The OECD report also forecasts that Saudi Arabia’s inflation will remain low and stable, projected at 1.9 percent in 2025 and 2 percent in 2026. This stands in contrast to the higher inflation rates seen in many major economies, particularly those facing trade-related disruptions and rising labor costs.

The Kingdom’s inflation stability is noteworthy, especially within the context of the OECD’s broader inflation projections. The report highlights that G20 headline inflation is expected to stay at 3.8 percent in 2025 and 3.2 percent in 2026, with core inflation remaining above target in several advanced economies, including the US.

Oil market and OPEC+ production strategy

A key factor driving Saudi Arabia’s economic performance is its oil sector, which continues to be a vital growth pillar despite the country’s ongoing efforts to diversify its economy under Vision 2030.

The OECD report noted that OPEC+ plans to gradually “unwind production curbs” starting in April 2025, a move that could have significant implications for global oil prices.

At the same time, Saudi Arabia’s efforts to boost non-oil revenue sources under Vision 2030—through investments in technology, tourism, and infrastructure—are helping to strengthen economic resilience amid market volatility. However, the OECD also cautioned that geopolitical risks and rising protectionist policies in global trade could disrupt energy markets, potentially leading to price fluctuations.

Global economic outlook

Beyond Saudi Arabia, the OECD painted a complex outlook for the global economy. “The global economy has shown real resilience, with growth remaining steady and inflation trending downward. However, signs of weakness have emerged, driven by heightened policy uncertainty,” said OECD Secretary-General Mathias Cormann.

Global GDP growth is projected to slow from 3.2 percent in 2024 to 3.1 percent in 2025 and 3 percent in 2026, with many advanced economies experiencing lower-than-expected growth due to increased trade barriers, inflationary pressures, and policy uncertainty.

The US economy is expected to see growth slow from 2.8 percent in 2024 to 2.2 percent in 2025 and 1.6 percent in 2026, as higher interest rates and trade tensions dampen investment and consumer spending. Similarly, the eurozone’s economy is projected to grow by just 1 percent in 2025 and 1.2 percent in 2026. China’s economy is also expected to decelerate, with growth slowing from 4.8 percent in 2025 to 4.4 percent in 2026.

Trade fragmentation and geopolitical risks

A key concern highlighted by the OECD is the growing rise of trade barriers and their potential impact on global economic stability. “Increasing trade restrictions will contribute to higher costs for both production and consumption. It remains essential to maintain a well-functioning, rules-based international trading system and keep markets open,” Cormann added.

The US has raised tariffs on imports from China by 20 percentage points, prompting retaliatory actions from China. In addition, higher tariffs on steel, aluminum, and other goods are expected to disrupt supply chains and increase production costs globally.

The OECD warned that such trade fragmentation could slow global growth and push inflation higher, particularly in economies heavily dependent on international trade. The report also noted that if trade tensions escalate further, global GDP could decline by an additional 0.3 percent over the next three years, with particularly severe effects on Canada, Mexico, and key European economies.

Monetary policy and inflation pressures

The OECD’s outlook also indicated that inflation remains a significant concern in many economies. While inflation is expected to moderate, it is likely to stay above central bank targets in key economies like the US, the eurozone, and the UK through 2026.

“Central banks should remain vigilant given heightened uncertainty and the potential for higher trade costs to push up wage and price pressures. Provided inflation expectations remain well-anchored, and trade tensions do not intensify further, policy rate reductions should continue in economies where underlying inflation is projected to moderate or remain subdued,” the report stated.

For emerging markets, inflation presents a mixed picture. Brazil and South Africa are expected to face persistent inflationary pressures, while India and Indonesia may see inflation remain relatively contained. Countries like Turkiye and Argentina, which have dealt with extreme inflation in recent years, are projected to see a sharp decline in inflation rates as fiscal and monetary tightening measures take effect.

The role of AI, structural reforms

Beyond trade and monetary policy, the OECD report emphasized the importance of structural reforms and digital transformation in enhancing long-term economic resilience.

“Governments can help by ensuring the availability of high-speed digital infrastructure, maintaining open and competitive markets, and providing opportunities for workers to enhance their skills,” the report noted.

OECD Chief Economist Alvaro Santos Pereira highlighted that AI is poised to drive significant labor productivity growth over the next decade, with even greater potential when combined with advancements in robotics.

“Yet, the gains from AI may diminish if policies do not facilitate higher adoption rates and support labor reallocation,” Pereira warned.

Navigating uncertainty

The OECD called for stronger international cooperation to prevent further trade fragmentation and urged governments to adopt a balanced approach to fiscal and monetary policies. It cautioned that excessive tightening of monetary policy could unnecessarily slow growth, while failing to manage inflation could lead to additional economic disruptions.

The report’s key policy recommendations emphasized the importance of avoiding further tariff escalations and seeking diplomatic trade solutions. It also highlighted the need for investments in AI and digital transformation to boost productivity, while maintaining cautious monetary policies to ensure inflation remains under control. Additionally, the report stressed the importance of encouraging structural reforms to build more resilient and dynamic labor markets.

RIYADH: Saudi Arabia’s Al-Jouf province recorded a 15 percent year-on-year growth in commercial activity in 2024 thanks to successful regional economic initiatives, new data showed.

Released by the Vision Realization Office in Al-Jouf, the study also indicated a significant increase in the growth rate of new commercial registrations in the region, reaching 98 percent, the Saudi Press Agency reported.

This falls in line with promoting development and growth while encouraging private economic activity across all regions of the Kingdom, in line with Saudi Vision 2030.

It also aligns with the region’s role as the northern gateway to the Kingdom, connecting it to Jordan and facilitating trade through the Al-Haditha land port. This terminal is the third busiest in the nation, handling $247 million in imports and exports in 2019, according to Invest Saudi.

The study monitored the growth of funded projects across the region, with 478 initiatives, and support for existing undertakings with liquidity estimated at SR22.05 million ($5.88 million).

Small and medium-sized enterprises recorded a 33 percent growth in 2024 compared to 2023, while the share of women-funded projects reached approximately 52 percent, a clear indicator of the empowerment of Saudi females.

The analysis primarily attributed these gains to the efforts and commitment of the region’s governor, Prince Faisal bin Nawaf bin Abdulaziz.

This comes as he worked on translating the generous directives into reality, serving the interests of citizens. He urged the branches of ministries and relevant agencies to harness all resources to overcome challenges and find appropriate solutions.

The governor also monitored the implementation of projects that serve the Al-Jouf region, its governorates, and centers, both investment- and development-oriented, as well as prevented any failures, achieving their set goals.

In March, Prince Faisal said that Saudi Arabia’s Al-Jouf province offers a fertile investment landscape due to abundant renewable energy and a robust food supply.

At the time, he highlighted that the region offers many investment opportunities and competitive advantages. He also emphasized that Al-Jouf has implemented various initiatives to overcome challenges for potential investors, with coordinated efforts across multiple government sectors.

The official also underlined at the time that the Al-Jouf region is actively fostering innovative investments through unique and pioneering projects. He emphasized that these endeavors will create future employment prospects for both male and female youth in the region and the nation at large.