ECONOMY

OPTIMISM CONTINUES FOR SAUDI AMID ECONOMIC UPSWING

The Saudi economy grew by 2.8% in the third quarter of 2024 compared to the same quarter of the previous year, according to the latest report from the General Authority for Statistics (GASTAT). Seasonally adjusted real GDP also increased by 0.9% as against the second quarter of 2024.

Non-oil economic activities emerged as the primary driver, expanding by 4.3% year on year (y-o-y), and 0.7% quarter on quarter (q-o-q). Government activities registered a y-o-y growth of 3.1%, although they experienced a slight q-o-q decline of 0.3%. Oil activities revealed minimal growth of 0.05% y-o-y and 1.2% q-o-q.

Government final consumption expenditure increased by 6.2% in the third quarter of 2024 versus the same period in 2023. However, it declined by 1.8% compared to the second quarter of 2024. Gross fixed capital formation accelerated by 4.5% y-o-y and 0.9% q-o-q. Private final consumption expenditure rose by 3.9% y-o-y and 2.8% q-o-q. On the trade balance front, imports grew by 7.3% y-o-y and 3.8% q-o-q, while exports increased by 3.0% y-o-y, but declined by 5.7% q-o-q.

Most economic activities recorded positive growth on an annual basis. Wholesale and retail trade, restaurants, and hotels achieved the highest growth rate in the third quarter of 2024, increasing by 5.8% y-o-y and 1.9% q-o-q. Financial, insurance, and business services followed closely, recording a growth of 5.7% y-o-y and 2.0% q-o-q. Construction activities also saw significant growth, rising by 4.6% y-o-y and 0.9% q-o-q.

GDP at current prices reached over SAR 1 trillion in the third quarter of 2024. Crude oil and natural gas activities made the largest contribution to GDP at 22.8%, followed by government activities at 16.1%, and wholesale and retail trade, restaurants, and hotels at 10.1%.

TRADE SURPLUS

Saudi Arabia enjoyed a trade surplus of SAR 20.76 billion in October 2024, according to a recently released trade bulletin. This marks an increase of over SAR 4 billion from SAR 15.99 billion in September of the same year.

The kingdom's total international trade volume reached SAR 164.79 billion in October, reflecting a 2% growth compared to SAR 162.20 billion in September. Merchandise exports contributed SAR 92.78 billion to the total trade volume, while imports accounted for SAR 72.01 billion.

Non-oil exports in October totalled approximately SAR 19.41 billion, representing 21% of total exports. Meanwhile, oil exports amounted to SAR 67.39 billion, constituting 72.6% of total exports, and re-exports reached SAR 5.96 billion or 6.4% of the total. 

Asian countries (excluding Arab and Islamic nations) remained the top destination for Saudi merchandise exports, accounting for 52.2% of the total, valued at SAR 48.40 billion. Gulf Cooperation Council (GCC) countries ranked second with 13.1% of the total (SAR 12.15 billion), followed by the European Union with 13% (SAR 12.07 billion).

China was the leading destination for Saudi exports in October 2024, representing 16.1% of total exports. India ranked second with SAR 8.79 billion (9.5%), and Japan was third with SAR 8.70 billion (9.4%).

Saudi’s non-oil exports, including re-exports, passed through 33 customs ports via sea, land, and air routes, with a total initial value of SAR 25.382 billion. Notably, King Fahd Industrial Port in Jubail recorded the highest value among all transportation ports, handling SAR 3.775 billion or 15% of the total.

DEBT FINANCING

To finance the country’s ambitious economic diversification initiative, the National Debt Management Center (NDMC) successfully completed its international bond issuance under the kingdom's Global Medium-TermNote Issuance Programme in January. 

The total order book reached approximately USD 37 billion, representing an oversubscription three times the total issuance of USD 12 billion (SAR 45 billion), according to the centre’s statement. The bonds were issued in a triple-tranche oering, with the first tranche totalling USD 5 billion for a three-year bond maturing in 2028. The second tranche amounted to USD 3 billion for a six-year bond maturing in 2031, while the third tranche was valued at USD 4 billion for a 10-year bond maturing in 2035.

This transaction aligns with NDMC's strategy to diversify the investor base and eciently meet the kingdom's financing needs through international debt capital markets. The bid-to-cover ratio underscores the strong demand for Saudi issuance, reflecting investor confidence in the country’s economic strength and its future investment opportunities, the statement noted.

Meanwhile, the Public Investment Fund (PIF) also issued its first murabaha credit facility for the sum of USD 7 billion as part of its medium-term capital raising strategy in January. The financing structure is supported by a diverse syndicate of 20 international and regional financial institutions.

The financing complements PIF’s successful sukuk issuance over the past two years. It also underpins PIF’s strong financial position, as well as its best-practice approach to debt financing.

PIF is rated Aa3 with stable outlook by Moody’s and A+ with stable outlook by Fitch Ratings. PIF has four main sources of funding: capital injections from government, government asset transfers, retained earnings from investments, and loans and debt instruments.