NEW DELHI: India is set to overtake the United Kingdom and France to become the world’s fifth largest economy next year, a report said Tuesday.
Currently ranked seventh, India will move up to fifth place in 2018 and vault to third spot by 2032, the Center for Economics and Business Research, a London-based consultancy, said in its annual rankings.
The Indian economy hit a three-year low in the first quarter of the current financial year, after Prime Minister Narendra Modi’s snap decision in November 2016 to scrap high-value banknotes and following a tax overhaul.
Growth slumped to 5.7 percent for the three months ending June but recovered slightly to 6.3 percent for the quarter ending September.
“Despite temporary setbacks... India’s economy has still caught up with that of France and the UK and in 2018 will have overtaken them both to become the world’s fifth largest economy in dollar terms,” said CEBR deputy chairman Douglas McWilliams.
Cheap energy and a digital revolution will drive economic growth globally, the report said. The world’s growth will be dominated by Asian economies, including India, China and Japan.
The United States, the world’s largest economy, will be overtaken by China in 2030, the report forecast, adding India would take that spot “at some time in the second half of this century.”
India to become fifth largest economy in 2018
India to become fifth largest economy in 2018
Saudi SME job growth hits 10-month high amid expansion plans
RIYADH: Saudi Arabia’s small and medium enterprises recorded their strongest employment growth in 10 months during December, fueled by long-term expansion plans and robust domestic demand, according to a new report.
The Riyad Bank Saudi Arabia SME Purchasing Managers’ Index stood at 56.9 in December, slightly lower than November’s 57.1 but well above the neutral 50 mark, indicating sustained growth in the sector.
Strengthening the SME segment is a cornerstone of the Kingdom’s economic diversification strategy under Vision 2030, aimed at reducing dependence on oil revenues.
Finance Minister Mohammed Al-Jadaan highlighted the sector’s rapid growth in October, noting that the number of SMEs in Saudi Arabia had doubled over the past seven years, with 45 percent now led by women entrepreneurs.
“The Riyad Bank Saudi Arabia SME PMI concluded the year on a high note, reflecting a robust performance of the SME sector. The fourth quarter of the year showcased a marked improvement over the third quarter, with the average PMI hitting 56.8, the highest quarterly reading since the end of 2023,” said Naif Al-Ghaith, chief economist at Riyad Bank.
He added: “This upturn in the SME sector is a testament to the thriving economic environment, characterized by increasing output levels and a surge in incoming new work.”
The report attributed December’s employment surge to sharp increases in output and incoming new work, supported by stronger business and consumer spending.
The analysis noted that SMEs widely reported strong demand conditions, fueled by increased business and consumer spending, alongside a supportive economic environment.
S&P Global stated that job creation rose in December, with staffing levels and growth rates accelerating at their fastest pace since February.
“This surge in employment is fueled by long-term business expansion plans and upcoming new projects, reflecting a positive outlook among SMEs,” said Al-Ghaith.
Despite higher input costs, including salary increases and rising raw material prices, inflation pressures eased slightly in December compared to the previous month.
Business confidence among SMEs reached its highest level since March, marking three consecutive months of improved expectations.
He added: “This optimistic trajectory aligns with Saudi Arabia’s Vision 2030.” “The strong performance of SMEs, as evidenced by the Riyad Bank Saudi Arabia SME PMI, underscores the ongoing efforts to bolster economic diversification and support the growth of this sector.”
He added that SMEs’ resilience and expansion are pivotal for achieving Vision 2030’s goals of creating sustainable employment and promoting inclusive economic growth.
The positive SME performance aligns with broader economic trends. A separate S&P Global report showed that Saudi Arabia’s overall PMI for December reached 58.4, signaling robust growth in the non-oil economy.
“By fostering a vibrant SME sector, Saudi Arabia can enhance its economic resilience, create sustainable employment opportunities, and promote inclusive growth, all key components of a diversified and dynamic economy,” concluded Al-Ghaith.
This employment growth reflects the Kingdom’s ongoing commitment to transforming its economy into a global hub for innovation, entrepreneurship, and investment.
Saudi Arabia de-risks investments to attract foreign SMEs: Al-Falih
- Initiative seeks to empower industrial investments and foster sustainable development
- Program also aims to build value chains by encouraging international SMEs to collaborate with local Saudi firms
RIYADH: Saudi Arabia is de-risking investments for foreign small and medium-sized enterprises to encourage their entry into the Kingdom, according to a senior official.
In an interview with Arab News on the sidelines of the Standard Incentives for the Industrial Sector program, Saudi Minister of Investment Khalid Al-Falih said the initiative aims to attract international SMEs that have been integral to supply chains in their home countries for decades.
The announcement follows a joint effort by the ministries of industry and mineral resources and investment to allocate SR10 billion ($2.66 billion) to activate standardized incentives for the industrial sector.
The initiative, approved by the Cabinet last month, seeks to empower industrial investments, foster sustainable development, and enhance Saudi Arabia's global industrial competitiveness.
“De-risking is a key component. Come to Saudi Arabia. We will de-risk the investment for you,” Al-Falih said, emphasizing the government’s commitment to creating a business-friendly environment.
He added: “We will do matchmaking with the Saudi investors, and then they can, hopefully, recreate, and maybe we innovate with them to do something bigger for what they are doing in their home country.”
The program also aims to build value chains by encouraging international SMEs to collaborate with local Saudi firms, fostering innovation and shared growth.
“I think the Kingdom has been doing well in attracting large multinationals. However, when we go to Germany, we find out 70 to 80 percent of the German GDP is by SMEs, who may only operate in Germany and Europe. They don’t know the Middle East. They don’t know Saudi Arabia,” Al-Falih explained.
He continued: “As we build these value chains, we need to help our SMEs in Saudi Arabia by bringing with them some international SMEs that have been doing some of this production and manufacturing, feeding the large OEMs for decades in their own home country.”
While Saudi Arabia has successfully attracted large-scale investments in multi-billion-dollar projects like the green hydrogen initiative, Lucid, and Ceer, Al-Falih noted that mid-sized companies face unique challenges. These include a lack of credit history, limited local ecosystems, and rising costs of funding and production.
“By us having this tool available to us, if it’s a new product, differentiated product, that will plug a missing component or a link in a value chain, we can do it quickly, and these companies will be able to bridge that gap and move quickly, so that’s the intention,” he said.
The initiative aligns with the Kingdom’s collaborative government approach, with policies shaped by the Localization and Balance of Payments Committee chaired by Crown Prince Mohammed bin Salman.
The program also leverages Saudi Arabia’s strategic geographic location — connecting three continents — its open market, and low customs tariffs to attract both international and local investors.
Speaking at the event, Al-Falih described the incentives as a significant step toward achieving Vision 2030’s goals and the National Investment Strategy, which aim to attract and develop industrial investments while elevating the Kingdom’s industrial competitiveness.
Saudi Arabia allocates $2.66bn to activate Standard Incentives Program for the industrial sector
RIYADH: Saudi Arabia announced the allocation of SR10 billion ($2.66 billion) to activate the Standard Incentives Program for the industrial sector, following a Cabinet approval last month.
The announcement was made during the Standard Incentives for the Industrial Sector event on Jan. 11.
According to a press statement, the initiative seeks to spur growth in the industrial sector by accelerating investments and achieving sustainable industrial development in the Kingdom to elevate the competitiveness of the Saudi industries globally.
Developing the industrial sector is crucial for Saudi Arabia as the Kingdom, under its Vision 2030 program, is pursuing an economic diversification journey by reducing its dependence on oil revenues.
“These incentives were developed within the framework of an integrated governmental effort, characterized by collaboration with various relevant government entities, particularly the pivotal role played by the Localization and Balance of Payments Committee,” said Saudi Arabia’s Minister of Industry and Mineral Resources Bandar Alkhorayef.
He added: “This committee serves as the overarching body for shaping policies, directions, and initiatives that enhance the empowerment of industrial investments and support national talents.”
The statement said the incentives program offers coverage of up to 35 percent of the initial project investment, capped at SR50 million for each qualifying initiative.
The program is divided evenly across the project lifecycle, granting 50 percent during construction and the remaining 50 percent during production.
The first phase of this program will target investments in chemical conversion industries, the automotive sector, and machinery and equipment, the statement added.
The incentives program will be rolled out to other industry segments in subsequent phases in the latter part of the year.
“This program is the first of its kind in the region and aims to enable the manufacturing of products that are not currently produced in the Kingdom. It opens new horizons for high-quality investments and allows local and international investors to benefit from the unique capabilities the Kingdom possesses,” said Alkhorayef.
He added: “The Standard Incentives Program has been designed to focus on achieving localization and local content targets, as these are fundamental elements for sustainable development.”
The minister further said that through the program, Saudi Arabia aims to empower industries that enhance the utilization of the Kingdom’s natural resources and increase reliance on local talent, contributing to reducing imports, strengthening the balance of payments, and fostering economic resilience.
During the event, Saudi Arabia’s Minister of Investment Khalid Al-Falih said that the Standard Incentives Program marks a significant step toward realizing the objectives of the Kingdom’s Vision 2030 and the National Investment Strategy.
“The program seeks to achieve the Vision 2030 goals in the short and medium term, including increasing non-oil exports to 50 percent of the size of the non-oil economy and localizing critical materials essential to the economy,” said Al-Falih.
He added: “Today, the industrial sector contributes to an investment that accounts for 40.8 percent of the gross domestic product. The industrial sector accounts for approximately 30 percent of foreign direct investment.”
Al-Falih also said that most of the licenses granted by the Ministry of Investment to international companies are in the manufacturing industry sector.
The investment minister added that 571 international companies have opened their regional headquarters in the Kingdom, most of which are industrial firms.
“We will provide these companies with enablers and incentives through various programs. Our role is to promote ourselves and enable various sectors to be competitive and ensure that all key sectors, as everyone has mentioned — starting with the industrial sector — are indeed attractive for investment,” said Al-Falih.
Al-Falih said that these incentives, in their current form, are expected to energize the industrial movement in the Kingdom, according to the statement.
The investment minister added that projections indicate that the initiative is expected to generate an estimated SR23 billion annually in GDP from the targeted projects.
During the event, Saudi Arabia’s Energy Minister Prince Abdulaziz bin Salman said each sector should understand its role in achieving its objectives.
He added that the Standard Incentives Program aims to launch economically viable projects, ensuring sustainable development in the Kingdom.
“Through this program, we also aspire to achieve sustainability by launching economically viable projects, creating quality job opportunities for Saudi men and women, and fostering innovation and creativity in industrial sectors,” said the energy minister.
He added: “We believe this methodology, centered on empowering industrial projects, will contribute to the gradual expansion of these investments, broadening the industrial base for both investors and the Kingdom as a whole.”
Prince Abdulaziz said these initiatives, in the future, will grow into leading companies that enrich the national economy, diversify income sources, steady the balance of payments, and boost non-oil exports.
Faisal Al-Ibrahim, Saudi Arabia’s minister of economy and planning, said that the program has been developed to grow and deepen the industrial base, which will significantly impact the overall non-oil economy.
“We look forward to seeing non-oil activities increase in number and become more sustainable. Therefore, it is important to design these incentives in a way that does not create additional dependency on them,” said Al-Ibrahim.
He added: “Instead, they should create dynamism in the private sector, enabling it to mature and reach a stage where it grows, continues to produce, and competes sustainably.”
According to Al-Ibrahim, the nation wants to create a dynamic private sector that relies on itself and benefits from the incentives program.
“We measure success through the creation of high-quality jobs, increased productivity, higher non-oil exports, and an overall increase in investment in the Kingdom, leveraging global value chains,” added Al-Ibrahim.
During the event, the Minister of State and member of the Council of Ministers, Hamad Al-Sheikh, said that the objective of the standard incentives program is to equip the industrial sector and investors in the Kingdom.
“The goal is to empower the industrial sector and investors, ensuring clarity regarding application mechanisms, evaluation criteria, and a clear process for prioritization in case multiple investors apply for the same opportunity,” said Al-Sheikh.
Al-Sheikh added that the program aims to encourage new waves of small and medium-sized factories to produce innovative and economically prioritized products for the national economy.
He said the incentives program promotes technology transfer and is expected to improve the trade balance through local production.
Saudi Arabia’s $2.66bn program to align industrial incentives with investor demand: Alkhorayef
- Program aims to empower industrial investments and promote sustainable development
- It seeks to reduce reliance on imports by targeting sectors with high dependency on foreign products and no local production
RIYADH: Saudi Arabia is taking a flexible approach to distributing its SR10 billion ($2.66 billion) standardized incentive program to maximize its impact across industries, according to a senior official.
In an interview with Arab News on the sidelines of the Standard Incentives for the Industrial Sector event, Saudi Minister of Industry and Mineral Resources, Bandar Alkhorayef, said the program is designed to align with investor demand and deliver optimal returns.
“We are now very flexible with regards to the split between different sectors because we would like to see, you know, how the appetite of the investor and where are the areas where maybe the program needs to focus more and put more effort,” Alkhorayef said.
The SR10 billion standardized incentive program, announced by Alkhorayef in his opening speech, aims to empower industrial investments and promote sustainable development.
Covering up to 35 percent of a project’s initial investment, capped at SR50 million per project, the program seeks to reduce reliance on imports by targeting sectors with high dependency on foreign products and no local production.
The initiative targets at least 200 projects, focusing on industries where the Kingdom relies heavily on imports.
“From the impact, the impact is mainly going to be on the balance of payment where all of the products that we have targeted are products where we have a lot of imports but there is no local production,” Alkhorayef said.
The objective is to “reduce our imports” while enhancing the industrial sector’s capabilities through new products and technologies.
The program is inclusive, accommodating both foreign and local investors. “Any investor who registers as a Saudi investor doesn’t have to be a Saudi national, so even foreign investors can tap into this opportunity,” Alkhorayef explained.
Two key requirements guide eligibility: the project must align with targeted products listed in the program, and the program will contribute up to SR50 million, not exceeding 30 percent of the project’s total investment size.
To ensure effective fund allocation, an inter-ministerial committee with representatives from the ministries of Industry, Investment, Economy, Finance, and Energy evaluates each project.
“They look at the different opportunities — what does the project bring to the table in terms of value, and then based on that, it’s allocated,” Alkhorayef said.
Unlike previous models tailored for large-scale projects, the current program has been designed to cater to SMEs.
“Today, we had to really design something that is more approachable by SMEs,” Alkhorayef added.
The minister emphasized the program’s focus on chemicals, automotive, and machinery sectors while maintaining flexibility to adapt to changing investor interests.
As part of Saudi Arabia’s Vision 2030 strategy, the incentive program aims to attract high-value investments, diversify the industrial base, and build a globally competitive manufacturing ecosystem.
Video game industry helping to reshape Saudi economy, experts say
- Saudi Arabia has secured the second-highest global ranking for average daily time spent playing video games
RIYADH: The booming video game industry in Saudi Arabia is expected to play a crucial role in materializing the economic diversification goals of the Kingdom by the end of this decade, according to experts.
Speaking to Arab News, Povilas Joniskis, managing director and partner at Boston Consulting Group, said that the gaming industry is steadily evolving in Saudi Arabia, with the Kingdom’s young population considering it an effective social communication tool.
The comments from Joniskis support the Kingdom’s National Gaming and Esports Strategy, which aims to ensure the sector creates jobs and contributes $13 billion to the country’s gross domestic product.
“Vision 2030’s economic diversification aims to unlock potential beyond oil and gas with a broad array of growing industry sectors. The gaming industry is rapidly emerging as one of them. The sector shows strong long-term potential, currently positioned as one of the largest entertainment verticals globally, second only to video and TV streaming services,” said Joniskis.
He added: “Saudi Arabia’s gaming market benefits from both demand and supply advantages. On the demand side, a young, vibrant population — predominantly under 35 — views gaming not just as entertainment but as a key social interaction platform.”
In July, a report released by US-based online gaming platform Mobile Premier League revealed that Saudi Arabia has secured the second-highest global ranking for average daily time spent playing video games.
Joniskis added that the video gaming industry in Saudi Arabia will create a multiplier effect across the broader economy, as it will attract global developers to come and invest in the Kingdom’s gaming sector, as well as create opportunities for local talent.
Federico Pienovi, chief business officer and CEO for Asia Pacific and Middle East and North Africa at Globant, echoed similar views and said the video game sector is creating new jobs in technology and creative fields while broadening the Kingdom’s entertainment landscape beyond traditional offerings.
“The growth of the video game industry is being integrated into major development projects like NEOM and Qiddiya, which aim to establish entertainment and cultural hubs in the region. Globant’s Games Studio is one of the companies working in this growing market, collaborating with Saudi giga-projects through their expertise in AAA game development and immersive experiences,” Pienovi told Arab News.
In November, Globant inked a deal with Qiddiya Investment Co. — fully owned by the Public Investment Fund — to turn Qiddiya City into an immersive hub for entertainment, sports, and culture.
Under the deal, Globant will work with QIC to develop the “PLAY LIFE Connected Experience,” a digital ecosystem designed to transform how visitors and residents interact with the destination’s wide range of offerings.
Pienovi added his firm is investing in gaming infrastructure and talent development, fostering both international partnerships and local initiatives as part of its strategy to become a key player in the global gaming market, as outlined in Vision 2030.
Soham Thacker, founder and CEO of esports gaming platform Gamerji, said that has been making long strides in promoting gaming and esports by conducting events like the Esports World Cup, Next World Conference and Gamers8.
“Saudi Arabia has successfully put itself as the epicenter of the video game industry. These events along with the upcoming Esports Olympics to be held in the region will boost the tourism as well as economic development of the country,” said Thacker.
Factors driving Saudi Arabia’s video game industry
Joniskis said that Saudi Arabia’s predominantly young population, with a majority under 35 years old, has embraced gaming as a primary form of entertainment and socializing, and it is driving the growth of the industry in the Kingdom.
The BCG official added that high disposable income among Saudi citizens also plays a crucial role, enabling access to premium gaming devices and extensive leisure time for entertainment pursuits.
“This purchasing power translates directly into enhanced gaming experiences through top-tier hardware,” said Joniskis.
He added: “Equally significant is the Kingdom’s robust technical infrastructure. Despite Saudi Arabia’s vast territory, the country maintains impressive network performance with CST reports showing low latency rates under 40ms across major titles including League of Legends, ML:BB, Call of Duty on both PC and mobile platforms, and PUBG Mobile.”
Pienovi said that high smartphone penetration rates and widespread access to high-speed internet have made mobile and online gaming easily accessible across the Kingdom.
“This infrastructure has helped establish gaming as a mainstream activity, supported by growing interest in esports tournaments, social media gaming communities, and live streaming platforms.
The cultural shift toward digital entertainment has been complemented by Vision 2030’s focus on expanding the entertainment sector,” said Pienovi.
Can Saudi Arabia become a global video game hub?
According to experts who spoke with Arab News, Saudi Arabia’s target to become a global video game hub by the end of this decade is an achievable goal thanks to the Kingdom’s National Gaming Strategy.
“Saudi Arabia’s ambition to become a global gaming hub, while bold, appears achievable through its unprecedented National Gaming Strategy. This coordinated approach ensures orchestrated delivery across various stakeholders and entities, setting a new standard for industry development,” said Joniskis.
The BCG official added that the Kingdom has aligned key market elements: strong local demand coupled with strategic initiatives, which include targeted incentive packages for global companies and talent, strategic investments through PIF and Savvy, and major infrastructure developments like Qiddiya and NEOM.
Thacker also underscored the pivotal role being played by PIF to turn the Kingdom into a global gaming destination by the end of this decade.
FAST FACT
Saudi Arabia’s predominantly young population, with a majority under 35 years old, has embraced gaming as a primary form of entertainment and socializing, and it is driving the growth of the industry in the Kingdom.
“Most of the gaming companies have the PIF as either their partner or an investor. Hence, it is very clear that the country aims to be the hub of the gaming industry and with the millions of dollars spent on events and tournaments in the region, Saudi Arabia is definitely poised to be the hub of gaming in the next few years,” said the Gamerji founder.
In January, Saudi Arabia’s sovereign wealth fund strengthened its investment in the video gaming sector by increasing its stake in Japan-based Koei Techmo from 5.56 percent to 6.6 percent.
Koei Tecmo is known for developing several popular video games including Nobunaga’s Ambition, Dynasty Warriors, Atelier, and Ninja Gaiden.
In 2023, PIF also raised its stake in Nintendo to 8.26 percent, making it the largest outside investor in the Japanese gaming company.
Nintendo is one of the most prominent names in the global video games industry, with a portfolio of titles including Pokemon, The Legend of Zelda, and Mario.
The role of Savvy Games
It was in September 2022 that Saudi Arabia’s Crown Prince Mohammed bin Salman launched the Savvy Games Group’s strategy, with an investment budget of $37.7 billion.
Savvy is currently accelerating talent in the Kingdom and catalyzing Saudi Arabia’s unique geographical location to build the dominant global hub for games and esports.
“Savvy Games, backed by the PIF, represents a significant step in developing Saudi Arabia’s gaming industry. With $38 billion allocated for investments, the initiative aims to attract international developers and publishers to establish local operations,” said Pienovi.
He added: “This substantial funding could accelerate industry growth by enabling partnerships between international gaming companies and local institutions. The investment strategy focuses on building technical capabilities, fostering innovation, and developing gaming infrastructure that aligns with global
industry standards.”
Echoing similar views, Joniskis told Arab News that Savvy Games has rapidly ascended to become one of the top 10 gaming companies globally by revenue, marking Saudi Arabia’s emergence in the global gaming industry.
The BCG official added that Savvy is strategically localizing game development activities within Saudi Arabia, creating opportunities for domestic talent.
“Through strategic acquisitions — ESL, FaceIt, and Vindex — Savvy has established itself as a global esports leader. Partnerships with industry leaders like Niantic and XSolla are strengthening the regional ecosystem through talent academies and incubators, supporting global companies’ regional expansion,” said Joniskis.
Areas of improvement
Joniskis also highlighted some of the areas that could be strengthened to accelerate the growth of Saudi Arabia as a global gaming destination.
“The Kingdom can strengthen its position by aligning game production incentives with established hubs like Montreal, Austin, and others, enhancing cost competitiveness to attract global developers and investment,” said Joniskis.
He added: “Education represents another crucial focus area. Expanding beyond traditional degree programs to include vocational training would create more accessible pathways for existing talent to enter the gaming industry. This comprehensive approach to talent development supports both immediate and long-term industry needs.”
For his part, Pienovi said that Saudi Arabia’s gaming presence requires a multi-faceted approach focusing on sustainable growth and innovation.
The Globant official also underscored the vitality of cultivating local talent through specialized education programs and strategic partnerships with global technology leaders.
“Innovation zones and dedicated gaming districts could serve as catalysts for industry growth, providing spaces where technology companies, startups, and creative talent can collaborate. This infrastructure development needs to be complemented by investment in competitive gaming facilities and events that can attract international attention,” added Pienovi.
