BEIRUT: Lebanon’s economy is sinking into a “deliberate depression,” the World Bank said Tuesday in a damning report stressing the authorities’ failure to tackle the crisis.
The fall 2020 edition of the Lebanon Economic Monitor predicted the economy will have contracted by 19.2 percent this year and projected a debt-to-GDP ratio of 194 percent next year.
“A year into Lebanon’s severe economic crisis, deliberate lack of effective policy action by authorities has subjected the economy to an arduous and prolonged depression,” a World Bank statement said.
Lebanon’s economy started collapsing last year as a result of years of corrupt practices and mismanagement.
The crisis was made worse by a nationwide wave of anti-government protests that paralyzed the country late last year and the Covid-19 pandemic this year.
The August 4 Beirut port blast, one of the largest non-nuclear explosions in history, brought the country to its knees and further fueled public distrust.
“Lebanon is suffering from a dangerous depletion of resources, including human capital, with brain drain becoming an increasingly desperate option,” the World Bank warned.
In 2020, Lebanon defaulted on its debt, banks imposed capital controls and inflation has reached triple-digit rates, dragging the country into its worst ever economic crisis.
Instead of taking emergency measures to rescue the economy, Lebanon’s political elite has continued to dither and bicker.
The previous government headed by Hassan Diab failed to adopt ambitious policies to tackle the crisis. It resigned under pressure over the blast nearly four months ago and a new cabinet has yet to be formed.
“Lack of political consensus on national priorities severely impedes Lebanon’s ability to implement long-term and visionary development policies,” said Saroj Kumar Jha, World Bank regional director.
He called for the quick formation of a new government capable of implementing short-term emergency measures and addressing long-term structural challenges.
“This is imperative to restore the confidence of the people of Lebanon,” he said.
An annual index compiled by Gallup that tracks people’s experience of stress and sadness said “no other country in the world saw negative experiences skyrocket across the board as much as Lebanon.”
The Negative Experience Index’s data was collected before the Beirut port blast, Lebanon’s worst ever peace time disaster.
Lebanon plunged into ‘deliberate depression’: World Bank
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Lebanon plunged into ‘deliberate depression’: World Bank
- The fall 2020 edition of the Lebanon Economic Monitor predicted the economy will have contracted by 19.2 percent this year
- Lebanon’s economy started collapsing last year as a result of years of corrupt practices and mismanagement
OECD predicts 3.8% economic growth for Saudi Arabia in 2025
RIYADH: Saudi Arabia’s economy is poised for substantial growth, with its gross domestic product projected to increase from 1.2 percent in 2024 to 3.8 percent in 2025.
This projection by the Organisation for Economic Co-operation and Development comes amid global economic uncertainties, as many advanced economies are expected to face sluggish growth due to escalating trade tensions, geopolitical instability, and inflationary pressures.
This forecast signals a remarkable turnaround for the Kingdom, positioning it as one of the fastest-growing economies within the G20 in the coming years. While Saudi Arabia’s GDP growth is expected to moderate slightly to 3.6 percent in 2026, global GDP growth is projected to slow to 3.1 percent in 2025 and 3 percent in 2026.
Stable inflation
The OECD report also forecasts that Saudi Arabia’s inflation will remain low and stable, projected at 1.9 percent in 2025 and 2 percent in 2026. This stands in contrast to the higher inflation rates seen in many major economies, particularly those facing trade-related disruptions and rising labor costs.
The Kingdom’s inflation stability is noteworthy, especially within the context of the OECD’s broader inflation projections. The report highlights that G20 headline inflation is expected to stay at 3.8 percent in 2025 and 3.2 percent in 2026, with core inflation remaining above target in several advanced economies, including the US.
Oil market and OPEC+ production strategy
A key factor driving Saudi Arabia’s economic performance is its oil sector, which continues to be a vital growth pillar despite the country’s ongoing efforts to diversify its economy under Vision 2030.
The OECD report noted that OPEC+ plans to gradually “unwind production curbs” starting in April 2025, a move that could have significant implications for global oil prices.
At the same time, Saudi Arabia’s efforts to boost non-oil revenue sources under Vision 2030—through investments in technology, tourism, and infrastructure—are helping to strengthen economic resilience amid market volatility. However, the OECD also cautioned that geopolitical risks and rising protectionist policies in global trade could disrupt energy markets, potentially leading to price fluctuations.
Global economic outlook
Beyond Saudi Arabia, the OECD painted a complex outlook for the global economy. “The global economy has shown real resilience, with growth remaining steady and inflation trending downward. However, signs of weakness have emerged, driven by heightened policy uncertainty,” said OECD Secretary-General Mathias Cormann.
Global GDP growth is projected to slow from 3.2 percent in 2024 to 3.1 percent in 2025 and 3 percent in 2026, with many advanced economies experiencing lower-than-expected growth due to increased trade barriers, inflationary pressures, and policy uncertainty.
The US economy is expected to see growth slow from 2.8 percent in 2024 to 2.2 percent in 2025 and 1.6 percent in 2026, as higher interest rates and trade tensions dampen investment and consumer spending. Similarly, the eurozone’s economy is projected to grow by just 1 percent in 2025 and 1.2 percent in 2026. China’s economy is also expected to decelerate, with growth slowing from 4.8 percent in 2025 to 4.4 percent in 2026.
Trade fragmentation and geopolitical risks
A key concern highlighted by the OECD is the growing rise of trade barriers and their potential impact on global economic stability. “Increasing trade restrictions will contribute to higher costs for both production and consumption. It remains essential to maintain a well-functioning, rules-based international trading system and keep markets open,” Cormann added.
The US has raised tariffs on imports from China by 20 percentage points, prompting retaliatory actions from China. In addition, higher tariffs on steel, aluminum, and other goods are expected to disrupt supply chains and increase production costs globally.
The OECD warned that such trade fragmentation could slow global growth and push inflation higher, particularly in economies heavily dependent on international trade. The report also noted that if trade tensions escalate further, global GDP could decline by an additional 0.3 percent over the next three years, with particularly severe effects on Canada, Mexico, and key European economies.
Monetary policy and inflation pressures
The OECD’s outlook also indicated that inflation remains a significant concern in many economies. While inflation is expected to moderate, it is likely to stay above central bank targets in key economies like the US, the eurozone, and the UK through 2026.
“Central banks should remain vigilant given heightened uncertainty and the potential for higher trade costs to push up wage and price pressures. Provided inflation expectations remain well-anchored, and trade tensions do not intensify further, policy rate reductions should continue in economies where underlying inflation is projected to moderate or remain subdued,” the report stated.
For emerging markets, inflation presents a mixed picture. Brazil and South Africa are expected to face persistent inflationary pressures, while India and Indonesia may see inflation remain relatively contained. Countries like Turkiye and Argentina, which have dealt with extreme inflation in recent years, are projected to see a sharp decline in inflation rates as fiscal and monetary tightening measures take effect.
The role of AI, structural reforms
Beyond trade and monetary policy, the OECD report emphasized the importance of structural reforms and digital transformation in enhancing long-term economic resilience.
“Governments can help by ensuring the availability of high-speed digital infrastructure, maintaining open and competitive markets, and providing opportunities for workers to enhance their skills,” the report noted.
OECD Chief Economist Alvaro Santos Pereira highlighted that AI is poised to drive significant labor productivity growth over the next decade, with even greater potential when combined with advancements in robotics.
“Yet, the gains from AI may diminish if policies do not facilitate higher adoption rates and support labor reallocation,” Pereira warned.
Navigating uncertainty
The OECD called for stronger international cooperation to prevent further trade fragmentation and urged governments to adopt a balanced approach to fiscal and monetary policies. It cautioned that excessive tightening of monetary policy could unnecessarily slow growth, while failing to manage inflation could lead to additional economic disruptions.
The report’s key policy recommendations emphasized the importance of avoiding further tariff escalations and seeking diplomatic trade solutions. It also highlighted the need for investments in AI and digital transformation to boost productivity, while maintaining cautious monetary policies to ensure inflation remains under control. Additionally, the report stressed the importance of encouraging structural reforms to build more resilient and dynamic labor markets.
UK businesses eyeing Middle East investments amid growing regional appeal: report
RIYADH: Interest among UK business leaders in the Middle East as a key investment hub has doubled to 36 percent, driven by the region’s economic transformation and strategic appeal, a new survey has revealed.
The study, conducted by communications consultancy Pagefield, surveyed over 200 senior figures across the finance, technology, and manufacturing sectors.
Europe is the leading region, with 55 percent of respondents naming it their primary international investment market, yet the Middle East’s growing appeal reflects regional efforts to diversify economies and attract foreign direct investment.
Mega projects such as Saudi Arabia’s NEOM and large-scale developments in the UAE are reshaping the landscape, promising to draw more global capital.
“The data shows a clear shift in UK businesses’ global outlook. While Europe remains a top priority, the sharp rise in interest in the Middle East and Asia signals a growing appetite for new, high-potential markets,” said Christopher Clark, partner at Pagefield.
He added: “Businesses are looking beyond traditional hubs and seeking opportunities in regions that offer both economic dynamism and strategic advantages.”
Saudi Arabia’s regional headquarters program has emerged as a major pull for international firms, including UK companies. The program offers incentives such as a 30-year exemption from corporate income tax and withholding tax on headquarters activities, alongside other benefits like discounts and support services.
Several leading UK firms, including IHG Hotels and Resorts, PwC, and Deloitte, have already set up their regional headquarters in the Kingdom, positioning themselves to capitalize on the country’s rapid economic transformation.
The survey also highlighted rising UK business interest in Asia, with investment focus climbing from 22 percent to 32 percent.
Participants in the survey emphasized the need for greater government support as UK firms pursue international expansion.
According to the study, 83 percent of UK companies stated that the government must do more to support international growth, with nearly 31 percent identifying Free Trade Agreements as the most crucial mechanism.
Other key factors influencing investment decisions among UK business leaders include economic stability, workforce quality, and a strong commitment to equality, diversity, and inclusion.
The report also noted that UK firms remain overwhelmingly optimistic about foreign direct investment, with 91 percent expressing confidence in cross-border expansion despite global economic and political challenges.
“UK businesses are ready to invest overseas, but they need the right conditions to do so. The government should stand ready to support outward as well as inward investment, as it will strengthen UK businesses and the UK economy,” said John Alty, senior adviser at Pagefield and former permanent secretary for the Department for International Trade.
He added: “Businesses are looking to the government to facilitate supply chains through free trade agreements and provide in-country support to boost business confidence.”
Saudi Arabia’s Al-Jouf records 15% annual growth in commercial activity
RIYADH: Saudi Arabia’s Al-Jouf province recorded a 15 percent year-on-year growth in commercial activity in 2024 thanks to successful regional economic initiatives, new data showed.
Released by the Vision Realization Office in Al-Jouf, the study also indicated a significant increase in the growth rate of new commercial registrations in the region, reaching 98 percent, the Saudi Press Agency reported.
This falls in line with promoting development and growth while encouraging private economic activity across all regions of the Kingdom, in line with Saudi Vision 2030.
It also aligns with the region’s role as the northern gateway to the Kingdom, connecting it to Jordan and facilitating trade through the Al-Haditha land port. This terminal is the third busiest in the nation, handling $247 million in imports and exports in 2019, according to Invest Saudi.
The study monitored the growth of funded projects across the region, with 478 initiatives, and support for existing undertakings with liquidity estimated at SR22.05 million ($5.88 million).
Small and medium-sized enterprises recorded a 33 percent growth in 2024 compared to 2023, while the share of women-funded projects reached approximately 52 percent, a clear indicator of the empowerment of Saudi females.
The analysis primarily attributed these gains to the efforts and commitment of the region’s governor, Prince Faisal bin Nawaf bin Abdulaziz.
This comes as he worked on translating the generous directives into reality, serving the interests of citizens. He urged the branches of ministries and relevant agencies to harness all resources to overcome challenges and find appropriate solutions.
The governor also monitored the implementation of projects that serve the Al-Jouf region, its governorates, and centers, both investment- and development-oriented, as well as prevented any failures, achieving their set goals.
In March, Prince Faisal said that Saudi Arabia’s Al-Jouf province offers a fertile investment landscape due to abundant renewable energy and a robust food supply.
At the time, he highlighted that the region offers many investment opportunities and competitive advantages. He also emphasized that Al-Jouf has implemented various initiatives to overcome challenges for potential investors, with coordinated efforts across multiple government sectors.
The official also underlined at the time that the Al-Jouf region is actively fostering innovative investments through unique and pioneering projects. He emphasized that these endeavors will create future employment prospects for both male and female youth in the region and the nation at large.
Qatar’s inflation drops 1.15% as key costs fall
- Housing, water, electricity, and other fuels saw a slight uptick of 0.11%
- Education costs climbed 1.70%, while health recorded a slight increase of 0.04%
RIYADH: Qatar’s inflation eased by 1.15 percent year on year in January, with the consumer price index settling at 107.45 points, driven by declines in food, housing, and transport costs, official figures showed.
According to the National Planning Council’s latest report, the monthly CPI also dropped by 2.53 percent, primarily due to a decline in housing, water, electricity, and other fuels — which fell by 2.53 percent from December.
The slide comes as Qatar is projected to record the lowest inflation in the Gulf Cooperation Council region this year, averaging 1.4 percent — below the GCC’s 1.9 percent and the wider Arab region’s 8.5 percent, according to Kamco Invest.
The International Monetary Fund expects Qatar’s inflation to stabilize around 2 percent over the medium term, supported by LNG expansion, public investment, and a strengthening tourism sector, according to a release in February.
The National Planning Council’s report said: “Reviewing the main changes in the CPI for the month of January 2025 compared with the previous month, findings show five categories decreased, six categories increased, and stability in one category.”
Food and beverage prices recorded a 2.75 percent monthly drop, while recreation and culture saw the sharpest decline at 14.87 percent. Clothing and footwear prices fell by 1.13 percent, and furniture and household equipment dipped 0.77 percent. The restaurants and hotels sector also saw a slight decrease of 0.55 percent.
Several categories recorded price increases including miscellaneous goods and services which rose by 1.93 percent, health by 0.91 percent, and transport by 0.61 percent.
Housing, water, electricity, and other fuels saw a slight uptick of 0.11 percent, while communication and education prices remained relatively stable, with marginal increases of 0.09 percent and 0.02 percent, respectively. Tobacco prices remained unchanged.
Year-on-year figures showed notable shifts across key sectors, with the annual CPI declining by 1.15 percent.
The drop was mainly driven by a 5.44 percent decrease in food and beverage prices, while housing, water, electricity, and other fuels fell by 4.67 percent.
Recreation and culture recorded a decline of 4.29 percent, followed by restaurants and hotels, which dropped by 1.82 percent.
Furniture and household equipment fell by 1.73 percent, while transport costs were down by 1.01 percent.
Miscellaneous goods and services rose 7.92 percent, communication saw an increase of 18.68 percent, and clothing and footwear rose 1.91 percent.
Education costs climbed 1.70 percent, while health recorded a slight increase of 0.04 percent.
The CPI excluding housing, water, electricity, and other fuels stood at 111.76 points in January, reflecting a monthly decline of 3.09 percent and an annual drop of 1.80 percent.
Despite the minor downward adjustments across multiple sectors, the council emphasized that consumer prices remain stable, with inflation largely contained within expected levels.
Jordan’s economy to expand by 2.7% in 2025: Central Bank governor
- Adel Sharkas said inflation reached 2.2% in the first two months of the year and is expected to stabilize at 2% for 2025
- Jordan attracted foreign direct investments valued at $1.3 billion during the first three quarters of 2024
RIYADH: Jordan’s economy is expected to grow 2.7 percent in 2025, further accelerating to 3.5 percent in the medium term, according to the governor of the country’s central bank.
Adel Sharkas made the comments in the wake of credit rating agency S&P Global stating that Jordan’s GDP expansion will be driven by the recovery of the tourism sector, as well as increasing trade relationships with Syria and Iraq.
The central bank governor added that inflation in Jordan reached 2.2 percent in the first two months of this year and is expected to stabilize at 2 percent for 2025, the country’s news agency, Petra, reported.
The growth aligns with the broader trend in the Middle East, with Saudi Arabia forecasting a gross domestic product expansion of 4.6 percent in 2025, and the Central Bank of UAE projecting the Emirates’ economy will increase by 4.5 percent this year and 5.5 percent in 2026.
Reflecting on the state of Jordan’s financial health, Sharkas said: “Our national economy has demonstrated exceptional resilience against challenges and high flexibility, enabling adaptation and limitation of consequences over the past five years, beginning with the coronavirus pandemic and subsequent consecutive external economic shocks.”
He added that Jordan attracted foreign direct investments valued at $1.3 billion during the first three quarters of 2024.
The CBJ governor further said that tourism income also jumped 22 percent in January compared to the same period last year.
Developing the tourism sector is crucial for Jordan, as the country considers this industry pivotal for economic growth and job creation.
Through the Jordan National Tourism Strategy 2021-2025, the country aims to attract international visitors with its archaeological and cultural heritage along with unique natural landscapes.
In a ceremony on March 16, Jordan’s banking sector committed 90 million dinars ($126.92 million) to fund health and education projects over the next three years.
Jafar Hassan, the country’s prime minister, said: “This banking sector that you represent has been a fundamental pillar supporting our national economy’s strength, stability and resilience throughout history.”
He added: “During a quarter century, this great development of our Jordanian banking sector has materialized, achieving advanced global ratings, particularly in financial strength and banking system solidity.”
In March, the World Bank said that it is assessing the financing of five projects aimed at supporting economic reforms, social protection, and entrepreneurship in Jordan, with a total potential investment valued at $900 million.
