Saudi Arabia’s economy is forecast to grow 4.2 percent next year after a 3.8 percent expansion this year, driven by heavy government spending, the respected Jadwa Investment bank said yesterday.
With buoyant crude prices and strong demand, the world’s largest supplier of oil will easily fund its budget and turn in a surplus, despite a planned 7 percent hike in spending from this year’s original budget, the Riyadh investment bank said in a report.
While both the state and private sectors will grow, state spending will remain the single most powerful driver of the economy.
“Government investment spending is budgeted at 256 billion riyals (US$68.3 billion) in 2011, equivalent to nearly 15 percent of GDP,” the report said.
While on paper a budget shortfall of 40 billion riyals (US$10.7 billion) is forecast for next year, Saudi budgets are normally highly conservative and most economists predict a surplus, even if the government overshoots its spending target as also expected.
“High spending will not prevent the government from running a budget surplus of around 6 percent of GDP, though it will require an oil price of nearly US$70 per barrel to balance the budget,” Jadwa said.
Global oil prices have held above the US$90 a barrel level over the past week.
Jadwa also forecast Saudi inflation holding at a relatively high 5.3 percent, near the current level, driven first by residential rents, but it added that “there is a risk of a gradual increase in inflation expectations” driven by high government spending and low interest rates.
“We expect interest rates to remain very low and do not anticipate the adoption of new policy measures to tackle rising prices,” Jadwa said, dismissing the idea that Riyadh would adjust the long-standing peg between the riyal and the US dollar.
JITTERS: Nexperia has a 20 percent market share for chips powering simpler features such as window controls, and changing supply chains could take years European carmakers are looking into ways to scratch components made with parts from China, spooked by deepening geopolitical spats playing out through chipmaker Nexperia BV and Beijing’s export controls on rare earths. To protect operations from trade ructions, several automakers are pushing major suppliers to find permanent alternatives to Chinese semiconductors, people familiar with the matter said. The industry is considering broader changes to its supply chain to adapt to shifting geopolitics, Europe’s main suppliers lobby CLEPA head Matthias Zink said. “We had some indications already — questions like: ‘How can you supply me without this dependency on China?’” Zink, who also
At least US$50 million for the freedom of an Emirati sheikh: That is the king’s ransom paid two weeks ago to militants linked to al-Qaeda who are pushing to topple the Malian government and impose Islamic law. Alongside a crippling fuel blockade, the Group for the Support of Islam and Muslims (JNIM) has made kidnapping wealthy foreigners for a ransom a pillar of its strategy of “economic jihad.” Its goal: Oust the junta, which has struggled to contain Mali’s decade-long insurgency since taking power following back-to-back coups in 2020 and 2021, by scaring away investors and paralyzing the west African country’s economy.
BUST FEARS: While a KMT legislator asked if an AI bubble could affect Taiwan, the DGBAS minister said the sector appears on track to continue growing The local property market has cooled down moderately following a series of credit control measures designed to contain speculation, the central bank said yesterday, while remaining tight-lipped about potential rule relaxations. Lawmakers in a meeting of the legislature’s Finance Committee voiced concerns to central bank officials that the credit control measures have adversely affected the government’s tax income and small and medium-sized property developers, with limited positive effects. Housing prices have been climbing since 2016, even when the central bank imposed its first set of control measures in 2020, Chinese Nationalist Party (KMT) Legislator Lo Ting-wei (羅廷瑋) said. “Since the second half of
AI BOOST: Next year, the cloud and networking product business is expected to remain a key revenue pillar for the company, Hon Hai chairman Young Liu said Manufacturing giant Hon Hai Precision Industry Co (鴻海精密) yesterday posted its best third-quarter profit in the company’s history, backed by strong demand for artificial intelligence (AI) servers. Net profit expanded 17 percent annually to NT$57.67 billion (US$1.86 billion) from NT$44.36 billion, the company said. On a quarterly basis, net profit soared 30 percent from NT$44.36 billion, it said. Hon Hai, which is Apple Inc’s primary iPhone assembler and makes servers powered by Nvidia Corp’s AI accelerators, said earnings per share expanded to NT$4.15 from NT$3.55 a year earlier and NT$3.19 in the second quarter. Gross margin improved to 6.35 percent,
RSS