DUBAI: The International Monetary Fund Tuesday slashed its economic growth forecast for the Middle East and North Africa to the worst level in more than a decade over Iran sanctions and regional unrest.
In its World Economic Outlook update, the global lender projected economic growth for the Middle East, North Africa, Afghanistan and Pakistan this year would be 1.0 percent, its worst since the IMF put them in one group in 2009.
The downgrade, the fifth in a year, is a half percentage point lower than its April projection.
The reduction is in large part due to a change in the IMF’s forecast for Iran’s growth “owing to the crippling effect of tighter US sanctions,” the lender said.
“Civil strife across other economies, including Syria and Yemen, add to the difficult outlook for the region.”
The price of oil, the main driver for revenues in the region, will also impact growth, the IMF added.
In 2018, the region saw 1.6 percent growth, down from 2.1 percent in the previous year.
The IMF in April projected Iran’s economy will shrink by a steep 6.0 percent this year, its worst performance since it contracted by 7.7 percent in 2012.
The new report provided no updated figures on the Iranian economy, the second largest in the region behind Saudi Arabia, but other reports predicted a deeper recession in the Islamic republic.
One report jointly prepared by the London-based Institute of Chartered Accountants in England and Wales and Oxford Economics, released early this week, said Iran’s economy is expected to shrink by 7.0 percent this year.
The report also predicted regional growth to be just 0.6 percent due to Iran sanctions and instability in the region.
US sanctions on Iranian oil exports were renewed in May and aim to halt Tehran’s overseas crude sales, which provide key revenues to the Islamic republic.
The IMF also attributed the lower growth projections to rising US-Iran tensions centered on recent incidents in the Gulf and unrest in several Arab nations.
“Civil strife in many countries raises the risks of horrific humanitarian costs, migration strains in neighboring countries, and, together with geopolitical tensions, higher volatility in commodity markets,” the IMF said.
The IMF raised its forecasts for Saudi economic growth this year by 0.1 percentage points, to 1.9 percent, and to 3.0 percent in 2020.
It attributed the boost to the development of the kingdom’s non-oil-related sectors.
The world’s largest oil exporter has substantially cut power and fuel subsidies as well as imposed fees on expatriates and a five-percent value added tax as part of a reform program to decrease dependence on oil.
IMF slashes Mideast growth projections over Iran sanctions
IMF slashes Mideast growth projections over Iran sanctions
- The IMF projected economic growth for the Middle East, North Africa, Afghanistan and Pakistan this year would be 1.0 percent
Saudi Fund for Development approves grant for King Salman Hospital in Pakistan — PM
- Project will be built in Hazara district with SFD grant of $40 million
- Riyadh also approves $1.2 billion oil deferred oil payment facility
ISLAMABAD: Prime Minister Shehbaz Sharif said on Feb. 6 the Saudi Fund for Development had approved a $40 million grant to build the King Salman Hospital in Pakistan’s northwestern Khyber Pakhtunkhwa province.
The announcement comes a day after Pakistan signed an agreement with SFD to defer by one year a $1.2 billion payment on the country’s oil imports.
SFD has supported more than 40 projects and programs valued at approximately $1.4 billion to finance energy, water, transportation and infrastructure projects in Pakistan since the Fund’s establishment in 1975.
“There are other SFD projects like the King Salman Hospital with an investment of $40 million” Sharif said while addressing a federal cabinet meeting in which he thanked Saudi authorities for approving the $1.2 billion oil facility. “These are grants and the hospital will be fully built with this in Hazara [district].”
The Saudi facility to defer oil payments can help Islamabad boost its foreign reserves ahead of the first review of a $7 billion International Monetary Fund bailout, due in March. The agreement comes as Pakistan continues to navigate a tricky economic recovery path and implement tough conditions attached to the IMF loan program.
“Our brother Crown Prince Mohammed bin Salman sent a delegation yesterday [Feb. 4] and our oil facility which was for 10 months in 2023 ended in December 2023,” Sharif added. “Now, it has been renewed and they have provided us with $1.2 billion annually for our oil facility.”
On Monday, Pakistan also finalized a loan agreement for a Gravity Flow Water Supply Scheme in the Mansehra district of KP under which the SFD will provide $41 million to enhance access to clean drinking water for at least 150,000 people, according to Sharif’s office.
The SFD has also proposed a partnership with the Pakistan government to offer training programs for young Pakistanis and impart “modern and relevant” skills to help them meet labor market demands in Saudi Arabia.
Pakistanis constitute one of the largest migrant communities in Saudi Arabia with an estimated 2.64 million working there as of 2023. While 97 percent of them are blue-collar workers, there is a growing demand for skilled labor in the Kingdom as it seeks to modernize its economy under the Vision 2030 scheme.
Oil Updates — prices decline amid rising US crude inventories, Sino-US tariff war
SINGAPORE: Oil prices slid on Wednesday as rising stockpiles in the US and market worries about a new Sino-US trade war offset President Donald Trump’s renewed push to eliminate Iranian crude exports.
Brent crude futures were down 39 cents, or 0.51 percent, at $75.81 a barrel by 7:27 a.m. Saudi time. US West Texas Intermediate crude (WTI) lost 26 cents, or 0.36 percent, to $72.44.
Oil on Tuesday traded in a wide range, with WTI falling at one point by 3 percent, its lowest since Dec. 31, after China announced tariffs on US imports of oil, liquefied natural gas and coal in retaliation to US levies on Chinese exports.
Prices rebounded, however, after Trump restored the “maximum pressure” campaign on Iran to curtail its nuclear program he enacted in his first term that cut Iranian crude exports to zero.
Weighing down the market on Wednesday was the higher-than-expected US crude inventories data overnight, said Jun Rong Yeap, a market strategist at IG.
Crude stocks rose by 5.03 million barrels in the week ended Jan. 31, according to market sources, citing American Petroleum Institute figures.
Gasoline inventories rose by 5.43 million barrels, and distillate stocks fell by 6.98 million barrels, the API reported, according to the sources.
Official US government oil inventory data is due to be released at 6:30 p.m. Saudi time on Wednesday.
Rising crude and fuel stockpiles in the world’s biggest oil consumer signal consumption weakness, adding to investor worries about the impact of tarrifs on the global economic and energy demand outlooks.
The impact of China’s retaliatory tariffs on US energy imports will be limited “given that neither global supply nor demand of these commodities are changed by China’s tariffs,” analysts at Goldman Sachs said in a note on Tuesday.
Both countries will be able to find alternative markets, the note said.
As for Iran, Trump on Tuesday restored his “maximum pressure” campaign on Iran that includes efforts to drive its oil exports down to zero in order to stop Tehran from obtaining a nuclear weapon.
While Trump said he was open to a deal with Iran, he signed a presidential memorandum re-imposing Washington’s tough policy on Iran. The plan could impact about 1.5 million barrels per day of oil that the country exports, analysts at ANZ said on Wednesday, citing shiptracking data.
“The clampdown on Iran may be what is needed to stabilize bearish sentiments for oil prices for now and there may room for further recovery, at least in the near term,” said IG’s Yeap.
Saudi Arabia’s Debt Capital Market set to reach $500bn by end of 2025: Fitch Ratings
RIYADH: Saudi Arabia’s Debt Capital Market is expected to hit $500 billion by the end of 2025, fueled by the Kingdom's economic diversification efforts under Vision 2030, according to Fitch Ratings.
In its latest report, Fitch highlighted several factors contributing to this growth, including the government’s need for deficit funding, maturing obligations, and continued reforms.
The DCM, which involves the trading of securities like bonds and promissory notes, serves as a key mechanism for raising long-term capital for both businesses and governments.
Fitch also noted that the DCM in the Gulf Cooperation Council region had surpassed the $1 trillion mark by November 2024, bolstered by strong oil revenues. The agency predicts continued growth, with the GCC region expected to remain one of the largest emerging-market issuers of dollar-denominated debt through 2025.
“Saudi Arabia’s sukuk market maintains a strong credit profile, with 97.4 percent of Fitch-rated Saudi sukuk rated investment-grade and 98 percent of issuers holding a stable outlook. Notably, no Fitch-rated Saudi sukuk or bonds defaulted in 2024,” said Bashar Al-Natoor, global head of Islamic finance at Fitch Ratings.
He added: “2025 has started strong, with a growing pipeline of issuances. We expect the market to surpass $500 billion by year end, driven by Vision 2030 initiatives, robust government support, and favorable funding conditions.”
Fitch’s analysis further said that Saudi Arabia became the largest dollar-denominated debt issuer in emerging markets (outside of China) and the world’s largest sukuk issuer in 2024. The Kingdom’s DCM grew by 20 percent year on year in 2024, reaching $432.5 billion in outstanding debt.
The report also emphasized the increasing importance of environmental, social, and governance debt in the region, with $18.6 billion in outstanding ESG-related bonds in 2024.
Saudi banks have significantly expanded their international DCM activities since 2020, aligning with their growth strategies and foreign-currency requirements. Additionally, corporates are diversifying their funding sources, moving beyond traditional bank loans, according to Fitch.
In another report, Fitch projected that global ESG sukuk issuances will exceed $50 billion in outstanding debt by 2025, driven by major Islamic finance markets like Saudi Arabia and Indonesia. The agency noted a 23 percent year-on-year growth in global ESG sukuk, which reached $45.2 billion in 2024, outpacing the 16 percent growth in global ESG bonds.
Saudi Cabinet approves cooperation agreement with WEF to secure minerals for development
RIYADH: Saudi Arabia’s Cabinet has authorized the Ministry of Industry and Mineral Resources to sign a cooperation agreement with the World Economic Forum to secure critical materials for global development.
According to the Saudi Press Agency, the Cabinet — chaired by Crown Prince Mohammed bin Salman — gave the green light for the deal among a host of decisions.
Strengthening the mining sector is a crucial goal outlined in the Kingdom’s Vision 2030 agenda, as the nation is steadily spearheading its economic diversification journey by reducing its reliance on crude revenues.
Speaking at the Future Minerals Forum in Riyadh in January, Alkhorayef said that Saudi Arabia seeks to promote exploration opportunities across 5,000 sq. km of mineralized belts in 2025, aligned with the Kingdom’s plans to establish mining as the third pillar of its industrial economy.
At that time, the minister added that Saudi Arabia’s mining sector is the fastest growing globally, with the country holding an estimated mineral potential worth $2.5 trillion.
New International Retail Council launched in Riyadh
RIYADH: An International Retail Council designed to unite top experts, decision-makers, and industry stakeholders has been launched at an industry event in Riyadh.
Announced at the Retail Leaders Circle Global Forum, event chairman Panos Linardos said the new body will tackle upcoming challenges and opportunities facing the sector across the globe.
This year’s gathering, taking place from Feb. 4 to 5, comes as the Kingdom’s retail sector continues to show strong resilience and sustained growth, with total sales reaching SR37.4 billion ($9.97 billion) in the third quarter of 2024, despite ongoing global economic uncertainties.
Retail sales in the Kingdom are forecast to reach $161.4 billion by 2028, according to data platform Statista, while the e-commerce sector is projected to surpass $13.2 billion by 2025.
Setting out the importance of the new council, Linardos said: “The IRC is not just another industry initiative — it is a forward-thinking response to an evolving global landscape.”
He added: “Retail is more interconnected than ever, yet faces growing complexity in regulation, technology, and consumer behavior. The IRC will unite leaders, visionaries, and experts to facilitate global dialogue, drive innovation, and shape policies that will define the industry’s next era.”
During his speech, the chairman highlighted that the IRC will initially focus on four key pillars shaping the future of commerce: luxury goods, retail real estate, cross-border trade, and grocery businesses.
Linardos also shed light on how geopolitical changes, economic volatility, supply chain challenges, and the rapid growth of artificial intelligence, as well as digital commerce, are transforming the retail industry at an unprecedented rate.
“The rules of global trade are being rewritten, cross-border commerce is evolving, and consumer expectations are shifting faster than ever before. In this moment of transformation, the need for collaborative leadership, innovation, and a strategic vision for the future of retail has never been greater,” he said.
The chairman added that the discussions at the forum will reflect shared goals and help lay the groundwork for actionable solutions.
Held under the theme “Rebuilding a Shared Future,” the event commenced with the “Business Outlook: Navigating A New Global Order” session.
It explored how geopolitical tensions, economic instability, and fast-paced technological advancements are affecting global commerce, with international business leaders sharing strategies to turn volatility into opportunity while fostering resilience and innovation.
Another session titled “A New Leadership Order: Building Growth in Turbulent Times” followed, highlighting the importance of leadership in overcoming economic challenges, boosting productivity, and promoting sustainable growth.
Industry experts shared strategies during the session for navigating complex business environments and using strategic adaptability to succeed in a constantly changing marketplace.
Discussions also centered on the transformative impact of social commerce, which is changing how consumers shop, engage with brands, and interact online.
With e-commerce in the Middle East expected to reach $57 billion by 2026, the importance of marketplaces in meeting shifting consumer expectations is crucial.
Chief Content Officer at EMARKETER Zia Daniell Wigder presented a report created in collaboration with the RLC Global Forum which offered a data-driven roadmap for the future of e-commerce in the Gulf Cooperation Council, providing valuable insights into consumer trends, market dynamics, and opportunities for sustainable growth in the region.
AI was another key focus of the day, with several sessions exploring its transformative impact on the retail sector.
Industry leaders discussed how the technology is being leveraged to enhance personalization, optimize supply chains, and improve operational efficiencies at scale.
According to a new report released by Knight Frank, Riyadh and Jeddah are driving a major transformation in Saudi Arabia’s lifestyle retail sector, reshaping the retail scene with 394,900 sq. meters of upcoming developments, all scheduled for completion by 2027.
The report further disclosed that the planned developments include food and beverage outlets, entertainment options, and lively public spaces.
Both major Saudi cities currently provide 670,500 sq. meters of lifestyle retail space, reflecting a 12 percent surge over the past year.
In Riyadh, the average lease rate for retail spaces is SR2,360 per sq. meter, with a 96 percent occupancy rate, while in Jeddah, lease rates average SR2,030 per sq. meter, with an occupancy rate of 70 percent.
