Saudi Arabia on Tuesday approved its budget for next year with spending of 1.31 trillion Saudi riyals ($350 billion) and an estimated deficit of 165.4 billion riyals ($44 billion), as it continues to fund its economic diversification plan.
The budget forecasts revenue of 1.15 trillion for 2026, an increase of 5.1 per cent on this year, the Ministry of Finance said. Revenue this year is estimated at 1.09 trillion riyals, a decline of around 7.8 per cent compared with previous estimates, mainly due to lower oil prices.
Spending for this year is estimated at 1.336 trillion riyals, an increase of 4 per cent on the approved budget, as a result of "the ongoing efforts to support promising sectors in order to achieve the objectives of Saudi Vision 2030, diversify the economic base, and achieve inclusive growth", the ministry said.
The government remains focused on the implementation of giga-projects and top-priority national strategies in line with the objectives of Saudi Vision 2030, the ministry said. This includes developing infrastructure, improving the quality of life and enhancing public services.
The ministry expects a budget deficit of 245 billion riyals in 2025, accounting for 5.3 per cent of GDP.
The 2026 budget was approved by Crown Prince Mohammed bin Salman, who also directed ministers and officials to commit to "implementing the programmes, strategies, and development and social projects included in the budget, consistent with the goals of the Saudi Vision 2030", the Saudi Press Agency reported.
Real GDP growth is expected to increase to 4.6 per cent in 2026, up from 4.4 per cent this year, supported by a 5 per cent growth in non-oil activities. Inflation is forecast to decline to 2 per cent next year from 2.3 per cent in 2025.
Saudi Arabia’s non-oil private sector business activity expanded at its fastest rate in 10 months in November, driven by higher sales, rapid hiring and increased purchases, according to the seasonally-adjusted Riyad Bank Saudi Arabia Purchasing Managers’ Index released by S&P Global on Wednesday.
While the headline PMI slipped to 58.5 in November, from 60.2 in October, it remained well above the 50 mark that separates growth from contraction, indicating a strong improvement in business conditions, the survey found.
The kingdom is pushing to reform its economy and cut its reliance on the sale of hydrocarbons to generate revenue. Developing non-oil sectors and further boosting foreign direct investment are central planks of the kingdom's Vision 2030 agenda. The reforms span sectors including property, investment, tourism and technology.
From the beginning of this year until the third quarter, GDP grew by 4.1 per cent annually, driven by a 4.7 per cent increase in non-oil activities, the ministry said.
"This is attributed to growing domestic demand, reflected in higher consumption and investment, resulting from expansion across diverse economic sectors," it said.
"It is also due to the impact of continued economic diversification which supported the growth of non-oil activities and enhanced the role of the private sector and its ability to create jobs and attract investment."
The percentage share of non-oil revenue covering total spending in the budget is expected to grow from 17 per cent in 2015 to around 37.5 per cent by the end of this year, the ministry said.
The total public debt balance is expected to reach about 1.45 billion riyals this year, rising to 1.62 billion riyals in 2026.
The kingdom has recorded a rise in foreign direct investment, with net inflows reaching about 46.5 billion riyals in the first half of this year, up more than 29 per cent annually, the ministry said.
Key products and UAE prices
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iPhone XR
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Apple Watch Series 4
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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.”
MATCH INFO
Barcelona 4 (Suarez 27', Vidal 32', Dembele 35', Messi 78')
Sevilla 0
Red cards: Ronald Araujo, Ousmane Dembele (Barcelona)
Ammar 808:
Maghreb United
Sofyann Ben Youssef
Glitterbeat
Profile of Hala Insurance
Date Started: September 2018
Founders: Walid and Karim Dib
Based: Abu Dhabi
Employees: Nine
Amount raised: $1.2 million
Funders: Oman Technology Fund, AB Accelerator, 500 Startups, private backers
Key findings of Jenkins report
- Founder of the Muslim Brotherhood, Hassan al Banna, "accepted the political utility of violence"
- Views of key Muslim Brotherhood ideologue, Sayyid Qutb, have “consistently been understood” as permitting “the use of extreme violence in the pursuit of the perfect Islamic society” and “never been institutionally disowned” by the movement.
- Muslim Brotherhood at all levels has repeatedly defended Hamas attacks against Israel, including the use of suicide bombers and the killing of civilians.
- Laying out the report in the House of Commons, David Cameron told MPs: "The main findings of the review support the conclusion that membership of, association with, or influence by the Muslim Brotherhood should be considered as a possible indicator of extremism."
The five pillars of Islam
1. Fasting
2. Prayer
3. Hajj
4. Shahada
5. Zakat
Top goalscorers in Europe
34 goals - Robert Lewandowski (68 points)
34 - Ciro Immobile (68)
31 - Cristiano Ronaldo (62)
28 - Timo Werner (56)
25 - Lionel Messi (50)
*29 - Erling Haaland (50)
23 - Romelu Lukaku (46)
23 - Jamie Vardy (46)
*NOTE: Haaland's goals for Salzburg count for 1.5 points per goal. Goals for Dortmund count for two points per goal.
