Saudi Arabia's economy grew by 5.5 per cent on an annual basis in the fourth quarter of last year, driven by a surge in the kingdom's oil and non-oil sectors, government estimates have shown.
Non-oil activities for the October-December period jumped 6.2 per cent, oil activities grew 6.1 per cent, while government services activities expanded by 2.9 per cent, the General Authority for Statistics (Gastat) said.
Oil sector activities included the production of crude, natural gas and refining operations.
Seasonally adjusted real gross domestic product grew by 1.3 per cent in the fourth quarter compared to the third quarter of 2022, driven by a 1.3 per cent rise in non-oil activities.
Most economic activities recorded positive growth in the last quarter, Gastat said.
Transport, storage and communication activities recorded the highest yearly growth rates of 13.1 per cent. They were followed by community, social and personal services (10.5 per cent), other mining and quarrying activities (8.4 per cent), and crude petroleum and natural gas (7.2 per cent).
The kingdom’s GDP at current prices stood at more than 1.02 trillion riyals ($272.75 billion) in the fourth quarter of last year, with crude petroleum and natural gas activities contributing 27.4 per cent to the national economy.
Government services activities accounted for 15.2 per cent while the manufacturing sector — excluding petroleum-refining activities — contributed 9 per cent.
The fourth-quarter GDP growth was Saudi Arabia’s seventh consecutive three-month expansion after the Covid-19 pandemic slowed economic activity in Opec’s biggest oil producer.
The real GDP of the Arab world’s largest economy grew by 8.7 per cent in 2022. It was underpinned by a sharp surge in oil activities, with an increase of 15.4 per cent, while non-oil activities and government activities grew by 5.4 per cent and 2.6 per cent, respectively, during the 12-month period to the end of December.
All economic activities achieved positive growth rates last year.
Crude petroleum and natural gas activities achieved the highest annual growth rates of 16.1 per cent, followed by transport, storage and communication (9.1 per cent), and petroleum refining (8.3 per cent).
The kingdom’s GDP at current prices amounted to more than 4.15 trillion riyals last year.
The crude petroleum and natural gas activities contributed 32.7 per cent to the economy. It was followed by government services, manufacturing excluding petroleum refining activities, and wholesale and retail, trade, restaurants and hotels adding 14.2 per cent, 8.6 per cent and 8.2 per cent, respectively.
The kingdom's preliminary estimates for 2023 indicate GDP growth of 3.1 per cent.
The International Monetary Fund expects the kingdom's economy to grow by 2.6 per cent this year and by 3.4 per cent in 2024.
Earlier this month, business activity in the non-oil economy of Saudi Arabia hit an eight-year high in February as output growth in the kingdom strengthened.
The reading for the Arab world's largest economy on the Riyad Bank purchasing managers' index rose to 59.8 in February from 58.2 in January, marking the fastest growth in non-oil private sector business conditions since March 2015.
The reading was well above the neutral 50 mark that separates growth from contraction.
Saudi Arabia's inflation rate for 2022 was estimated at 2.6 per cent and, according to preliminary forecasts, is expected to hit 2.1 per cent in 2023, Saudi Finance Minister Mohammed Al Jadaan said in December.
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- AI ambassadors such as MIT economist Simon Johnson, Monzo cofounder Tom Blomfield and Google DeepMind’s Raia Hadsell
- £10bn AI growth zone in South Wales to create 5,000 jobs
- £100m of government support for startups building AI hardware products
- £250m to train new AI models
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
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Four tips to secure IoT networks
Mohammed Abukhater, vice president at FireEye in the Middle East, said:
- Keep device software up-to-date. Most come with basic operating system, so users should ensure that they always have the latest version
- Besides a strong password, use two-step authentication. There should be a second log-in step like adding a code sent to your mobile number
- Usually smart devices come with many unnecessary features. Users should lock those features that are not required or used frequently
- Always create a different guest network for visitors
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