DUBAI: Global economies remain at risk of further financial shocks and are ill-prepared for the coming wave of innovation and automation, according to the World Economic Forum (WEF).
The WEF’s global competitiveness report — its annual ranking of the strength of 137 economies around the world — warns that 10 years on from the global financial crisis, “the prospects for a sustained economic recovery remain at risk due to a widespread failure on the part of leaders and policy-makers to put in place reforms necessary to underpin competitiveness and bring about much-needed increases in productivity.
“Levels of ‘soundness’ have yet to recover from the shock of 2007 and in some parts of the world are declining further. This is especially of concern given the important role the financial system will need to play in facilitating investment in innovation,” the WEF added.
The economies of the Middle East and North Africa improved their average performance in the first half of 2017, despite challenges mainly from the decline in energy prices. The most improved country in the region was Egypt, up 14 slots to 101 in the world.
“Low oil and gas prices are forcing the region to implement reforms to boost diversification, and heavy investments in digital and technological infrastructure have allowed major improvements in technological readiness. However, these have not yet led to an equally large turnaround in the region’s level of innovation,” the WEF said.
The UAE was again ranked top of the regional rankings, at 17th, down one slot from last year. Saudi Arabia was ranked 30th, also down one position.
Qatar fell by seven positions to 25th, though the WEF noted that the report was compiled before the economic effects of the economic sanctions introduced by some of its Gulf neighbors because of allegations of terrorism funding.
“The country will have to ensure better access to digital technologies for individuals and businesses, and further strengthen educational institutions,” the WEF said.
On Saudi Arabia, the report said: “The macroeconomic environment has improved slightly after the 2015 oil price shock, but financial market efficiency has deteriorated as interest rates increased in 2016 and credit growth slowed.
“The country has stable institutions, good-quality infrastructure, and the largest market in the Arab world. Saudi executives see restrictive labor regulations as their most problematic factor for doing business: The labor market is segmented among different population groups, and women remain largely excluded,” the WEF added.
Another concern is the lack of adequately educated workers. Although tertiary enrolment is strong at 63 percent, more efforts are needed to advance the quality of education and align it with economic needs, the report said.
The UAE “continues to lead the Arab World in terms of competitiveness, but it loses one place as other countries post even larger gains,” the WEF said.
“This improvement shows the resilience of the UAE economy, in part due to increased diversification, which is reflected in its stable macroeconomic environment and its ability to weather the double shock of lower oil and gas prices and reduced global trade,” the report added.
Although the International Monetary Fund (IMF) predicts gross domestic product (GDP) growth to drop to 1.3 percent this year, non-oil growth is expected to pick up, suggesting that the country’s diversification strategy is bearing fruit. To further increase its competitiveness, the UAE will have to speed up progress in terms of spreading the latest digital technologies and upgrading education.
For the ninth consecutive year, Switzerland — home of the WEF — was judged the most competitive economy in the world, narrowly ahead of the US and Singapore, which switched positions in second and third.
Another key finding of the report is that competitiveness is enhanced, not weakened, by combining degrees of flexibility within the labor force with adequate protection of workers’ rights.
“With vast numbers of jobs set to be disrupted as a result of automation and robotization, creating conditions that can withstand economic shock and support workers through transition periods will be vital,” the WEF said.
The data also suggests that the reason innovation often fails to ignite productivity is due to an imbalance between investments in technology and efforts to promote its adoption throughout the wider economy.
Klaus Schwab, WEF founder and executive chairman, said: “Global competitiveness will be more and more defined by the innovative capacity of a country. Talents will become increasingly more important than capital and therefore the world is moving from the age of capitalism into the age of talentism.”
Threat of financial crisis has not gone away, WEF warns
Threat of financial crisis has not gone away, WEF warns
Saudi Arabia’s 2025 education plan boosts Chinese learning, nurtures gifted talent
RIYADH: Around 102,000 students in Saudi Arabia will learn Chinese annually in public schools, while three new institutions for the gifted will open as part of the Kingdom’s 2025 education plans.
According to the Ministry of Finance’s budget report, the education sector has been allocated SR201 billion ($53.50 billion), representing 16 percent of the government’s expenditures for the coming year.
According to Mansoor Ahmed, an independent adviser in various sectors including education: “Saudi Arabia’s higher education sector is the largest individual education market across the Arabian Gulf region with a staggering 2 million students enrolled in 2022.”
He said: “Notably, 95 percent of these students are enrolled in public and semi-public institutions, underlining a significant reliance on the public sector for higher education. This reliance is attributed to the perception of higher quality and job prospects offered by public institutions.”
According to Ahmed, the government’s funding allocation for this sector is expected to shift higher education demand towards fields like AI, robotics, and renewable energy, while focusing more on R&D to address skills gaps and align education with job market needs.
This funding aims to promote comprehensive education, enhance learning within families and communities, and equip individuals with the skills necessary for national development and workforce readiness.
It was announced in September that Saudi Arabia had begun teaching the Chinese language to primary and middle school students to equip learners with valuable skills and promote cultural appreciation.
Pupils are now learning Mandarin, with 175 educators teaching the language as part of an agreement between the Kingdom and China. The program aims to improve job prospects and academic opportunities, particularly for those interested in studying at Chinese universities.
The initiative aligns with Saudi Vision 2030 and China’s growing global influence, further strengthening the trade and cultural ties between the two nations, according to the Ministry of Education.
The program started with pilot schools and will gradually expand to include high school students by 2029. Educators from both nations view the initiative as a “win-win,” promoting cultural exchange and enhancing communication between the two countries.
Key projects for Saudi Arabia’s education sector in 2025, as mentioned in the Kingdom’s budget for the coming fiscal year, include increasing kindergarten enrollment to 40 percent to help achieve the Vision 2030 target of 90 percent while addressing the need for specialized teaching staff.
There are also plans to expand enrollment for students with disabilities and build sports halls for girls in public schools.
According to Ahmed: “In Saudi Arabia, approximately 293,000 children are identified with various disabilities. The National Transformation Program 2020 aims to ensure that 200,000 children with disabilities aged 6-18 would benefit from specialized education programs and support services.”
Ahmed noted that under the Rights of Students with Disabilities and Equal Participation in Education or RSEPI, all children with disabilities in Saudi Arabia are guaranteed free and appropriate education, encompassing individual education plans, early intervention programs, and transition services.
He also highlighted the increasing private sector interest in this area, exemplified by Amanat’s acquisition of a 60 percent stake in the Human Development Co. for SR220.3 million.
The company is a major provider of special education and care services in the Kingdom, operating nine schools, 22 daycare centers, and rehabilitation clinics across six provinces.
The Kingdom aims to raise the percentage of accredited training institutions to 39 percent while establishing three new academic facilities dedicated to nurturing gifted students in areas such as sports and technology, with one school set to open in Riyadh.
Saudi Arabia’s focus on education and the significant investment in this sector reflects its commitment to diversifying its economy and empowering its youth to contribute to the Kingdom’s future growth.
This emphasis on education is driven by the country’s long-term Vision 2030 goals, which seek to transition away from oil dependency and create a knowledge-based economy.
Saudi Arabia has recognized that education plays a central role in shaping the future of its citizens, particularly the younger generation. This has led to a series of reforms aimed at improving the quality of schooling, increasing access to education, and fostering specialized skills.
As the Kingdom seeks to boost industries beyond oil, there is a clear need for a skilled workforce in technology, renewable energy, healthcare, and entertainment sectors.
The Saudi government has also been encouraging international collaboration in the education sector to enhance its global competitiveness. For example, opening branches of prestigious universities, such as Arizona State University, is part of a larger strategy to elevate the country’s standing in the global education rankings.
This is intended to provide students with access to world-class education and attract international talent to the Kingdom.
Main 2024 achievements for education sector
The Ministry of Finance’s budget report shows that the significant investment in the Kingdom’s education sector has played a key role in the sector’s notable achievements.
For instance, three Saudi universities have now ranked among the top 200 globally, with King Saud University advancing into the top 100 in the prestigious Shanghai rankings.
In addition, the percentage of higher education graduates entering the workforce within six months of graduation has increased to 43 percent, a jump from 32 percent in 2023, highlighting the country’s efforts to improve job readiness among graduates.
Saudi Arabia is also enhancing its educational institutions’ credibility, with four training facilities receiving institutional accreditation to support the Human Capability Development Program and raise the overall national education standard.
On the infrastructure front, three Saudi cities—Madinah, Al-Ahsa, and King Abdullah City in Thuwal—have been included in UNESCO’s Network of Learning Cities.
These cities aim to foster a more holistic and inclusive learning environment, offering educational opportunities for all ages and helping to equip citizens with the necessary skills for national development and workforce participation.
Furthermore, Saudi Arabia is expanding its research and development capabilities with the establishment of 40 centers dedicated to innovation, technology, and creativity.
These centers will promote research and entrepreneurship, fueling the growth of new ideas and inventions. In 2024, the Kingdom saw a 10 percent increase in the enrollment of gifted students, with 28,264 scholars now participating in the National Program for Gifted Identification.
Additionally, the country achieved six international awards in areas such as technical activity, innovation, and education.
In terms of physical infrastructure, Saudi Arabia is investing heavily in the construction of new educational facilities. A public-private partnership initiative is developing 30 schools in Madinah to create modern and efficient educational facilities.
In November, PwC Middle East announced the acquisition of Emkan Education, a Saudi consultancy specializing in education and skills development advisory services. The partnership is seen as a significant step toward building a future-ready education system in the Kingdom.
The acquisition adds Emkan’s experienced professionals, including three prominent Saudi female education leaders, to PwC’s Middle East schooling practice.
This integration will strengthen PwC’s regional capabilities and support Saudi Arabia’s goal of fostering innovation, empowering citizens, and driving economic transformation.
S&P Global forecasts 4.7% GDP growth for Saudi Arabia in 2025
RIYADH: S&P Global has projected steady growth for Saudi Arabia’s economy, forecasting a 0.8 percent gross domestic product increase in 2024 and a robust 4.7 percent in 2025.
The agency’s adjustments to its earlier forecasts reflect a recalibration of oil production assumptions, now expected at 9.5 million barrels per day in 2025, down from 9.7 million.
The Kingdom’s non-oil sector continues to exhibit strong potential, supporting Saudi Arabia’s economic diversification efforts.
S&P also anticipated low and stable inflation in the Kingdom, forecasting rates of 1.8 percent in 2024 and 1.7 percent in 2025, highlighting the country’s success in maintaining price stability amid global economic volatility.
The agency reduced its real GDP growth forecasts for emerging markets by 10 basis points for both 2025 and 2026, now projecting growth rates of 4.3 percent and 4.4 percent, respectively.
The Kingdom saw the largest downward revision for 2025, with a reduction of 60 bps, followed by Hungary and Mexico.
“In Saudi Arabia, our revision reflects lower oil production assumptions than previously anticipated,” S&P stated.
The report cited recent OPEC+ announcements and trends in global oil markets as factors behind the adjusted projections for Saudi oil output.
S&P also revised its forecasts for other regions. South Africa’s GDP growth projections were raised to 1 percent in 2024 and 1.6 percent in 2025, driven by strong retail sales and a new pension scheme boosting household consumption. While infrastructure challenges remain, ongoing reforms could enhance long-term growth prospects.
In Southeast Asia, S&P noted heightened uncertainty due to reliance on trade and slowing growth in China.
However, domestic demand remains resilient, supported by sectors like IT, finance, and a recovering tourism industry. Manufacturing, particularly electronics, continues to perform well, and inflation is under control, enabling some central banks to ease monetary policy.
S&P upgraded growth forecasts for Malaysia and Vietnam, citing strong electronics supply chains and resilient domestic demand. Vietnam also benefits from recovering financial and real estate sectors. India’s growth remains robust but is expected to moderate after April 2025 due to slowing consumer momentum and challenges in the rural economy.
The Philippines is projected to see slightly slower growth due to softer consumption, though infrastructure investment will provide medium-term support. Indonesia and Thailand maintain stable outlooks, with emerging sectors like electric vehicles and fiscal stimulus driving development.
S&P also highlighted downside risks to global growth, particularly from uncertainties in US trade policy under President-elect Trump.
While the agency assumed a modest tariff increase between the US and China, it warned that more aggressive measures could significantly disrupt global trade and demand.
Tariffs targeting additional countries could amplify these effects, increasing risk premia and tightening financial conditions for emerging markets, especially those with weaker fundamentals.
Geopolitical risks remain elevated, particularly due to the Russia-Ukraine conflict, which has escalated with ballistic missile launches.
According to S&P, this uncertainty could heighten risk aversion toward emerging market assets and impact commodity prices.
Islamic banking in Kuwait and Oman stable amid favorable conditions: Fitch Ratings
RIYADH: The standalone credit profiles of Islamic banks in Kuwait are expected to remain stable in 2025, supported by favorable operating conditions, according to a recent analysis by Fitch Ratings.
The report highlighted that Islamic banking remains a significant sector in Kuwait, accounting for 49 percent of total banking sector assets by the end of the first half of this year.
This follows a similar forecast from Moody’s in September, which predicted faster growth for Islamic financing compared to conventional banking. Moody’s cited rising demand for Shariah-compliant products and the inherent stability of Islamic banks’ net profit margins as key drivers.
Fitch Ratings noted that capital at Kuwaiti Islamic banks remains adequate, supported by moderate growth and steady profitability in 2024 and 2025.
“As for conventional banks, we view Islamic banks’ profitability to have peaked, and we expect earnings to slightly decline in 2025 following expected rate cuts,” said Fitch Ratings.
The credit rating agency noted that funding at Kuwaiti Islamic banks remains strong, with 80 percent sourced from customer deposits.
The report also highlighted a slight increase in the average impaired financing ratio among Islamic banks in Kuwait, rising to 2 percent by the end of the first half, driven by pressure from higher rates and slower financing growth.
“The average financing impairment charges/average gross financing ratio increased slightly in the first half of 2024 but remains well below the pandemic level. Relatively high real estate exposure and concentration are key risks to the bank’s asset quality. Fitch expects asset quality to be stable in 2024-2025,” added Fitch.
Oman’s Islamic finance sector expanding
In a separate report, Fitch Ratings indicated that Omani Islamic banks are benefiting from favorable economic conditions, improving asset quality, stable profitability, and reasonable liquidity.
The total assets of Omani Islamic banks stood at $21.3 billion by the end of the third quarter of this year, with the Islamic banking sector holding a market share of 18.7 percent of the country’s total banking assets.
Fitch pointed to several factors driving the growth of Islamic finance in Oman, including increasing public demand, deeper distribution channels, the use of sukuk by both the government and corporates, and regulatory initiatives.
“The Central Bank of Oman addressed a structural gap in October 2024 with the introduction of the Bank Deposit Protection Law, which would protect Islamic banks’ deposits,” said Fitch.
“We expect this will aid confidence in Oman’s Islamic banking sector as the previous deposits insurance scheme only covered conventional banks’ deposits,” it added.
The report forecast that Oman’s Islamic finance sector will surpass $40 billion in the medium term, with Fitch estimating its total value at $30.9 billion by the end of September 2024.
According to the analysis, the Omani debt capital market reached $45 billion in outstanding debt by the end of the third quarter. There is no expectation of a significant short-term surge, as the government continues to prepay more of its debt using the budget surplus generated by high oil prices.
Fitch also highlighted Oman’s growing sukuk issuance, which increased by 86 percent year on year to $2 billion in the first nine months of 2024, outpacing conventional bond issuance, which rose 53 percent to $5.6 billion during the same period.
Fitch stated: “The Omani Islamic finance sector remains one of the smallest in the GCC (Gulf Cooperation Council),” and pointed out that it continues to face several challenges.
These challenges include “the lack of Islamic liquidity-management instruments and smaller capital bases compared to the conventional banks,” which, according to Fitch, “could restrict their involvement in major government financing projects.”
However, Fitch emphasized the sector’s long-term growth potential, citing recent regulatory developments and Oman’s predominantly Muslim population as key factors supporting future expansion.
Saudi Aramco maintains propane, butane prices for December
RIYADH: The Saudi Arabian Oil Co., also known as Saudi Aramco, kept its December contract prices unchanged month on month at $635 per tonne, according to an official statement
The company also maintained butane prices for the month at $630 per tonne.
Propane and butane are types of liquefied petroleum gas with different boiling points. LPG is commonly used as a fuel for vehicles, heating, and as a feedstock for various petrochemicals.
Aramco’s OSPs for LPG are used as a benchmark for contracts supplying the product from the Middle East to the Asia-Pacific region.
In winter, the demand for propane rises significantly due to its use in heating homes, which can lead to higher prices if supply struggles to keep up.
Such fluctuations are a normal part of the market and are expected during colder months. The increase in prices reflects the basic economic principle of supply and demand, with higher demand resulting in higher costs.
Mawani, Lloyd’s Register ink deal to streamline maritime operations
RIYADH: The Saudi Ports Authority has signed an agreement with the UK’s Lloyd’s Register to unify and streamline operational and maritime procedures across Saudi ports.
The deal is set to enhance efficiency by developing comprehensive manuals and guidelines, including quality and environmental procedure manuals that align with International Organization for Standardization standards, the Saudi Press Agency reported.
The collaboration aligns with Mawani’s efforts to improve operational excellence at ports and strengthen Saudi Arabia’s connectivity with global markets, thus boosting national exports. As part of the partnership, the Saudi Ports Authority aims to double the container throughput capacity at its ports, from 20 million containers to over 40 million.
This goal is part of Saudi Arabia’s broader vision to modernize its logistics infrastructure under the National Transport and Logistics Strategy, which targets increasing the sector's contribution to gross domestic from 6 percent to 10 percent.
The deal also seeks to define clear responsibilities through a code of good practices, ensuring compliance with updated International Maritime Organization agreements.
Additionally, the partnership will help secure international certifications such as ISO 9001:2015 for quality management and ISO 14001:2015 for environmental management, further enhancing operational efficiency, customer satisfaction, and sustainability practices.
As part of the cooperation, comprehensive training programs will be offered to port employees, including courses on ISO standards, maritime certifications, and the latest inspection and safety protocols. Digital solutions and cutting-edge technologies will also be integrated to support sustainable operations and improve overall port competence.
Lloyd’s Register, a renowned maritime classification society established over 260 years ago, is one of the most prestigious organizations in the global maritime sector. The company operates in 81 offices worldwide and serves over 40,000 clients across the maritime and logistics industries.
