Lebanon’s economy to contract amid ongoing armed conflict, as region faces challenging 2024: EBRD

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Updated 01 October 2024
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Lebanon’s economy to contract amid ongoing armed conflict, as region faces challenging 2024: EBRD

  • Inflation, which had soared to a peak of 352 percent in March 2023, decreased to 35.4 percent by July 2024
  • Nonetheless, unemployment remains high, with over a third of the workforce without a job

RIYADH: Lebanon’s economy is projected to contract by 1 percent in 2024 under the severe weight of armed conflict and a deepening political and economic crisis, though a return to growth remains possible.

The European Bank for Reconstruction and Development’s latest Regional Economic Prospects report highlighted that these factors have created an environment of extreme instability, further undermining gross domestic product growth prospects due to stalled reforms and the lack of progress on an International Monetary Fund program.

Inflation, which had soared to a peak of 352 percent in March 2023, decreased to 35.4 percent by July 2024. Nonetheless, unemployment remains high, with over a third of the workforce without a job, highlighting the dire socio-economic conditions. 

The EBRD report noted that a return to modest growth is possible, saying: “Growth could return to a forecast 2 percent in 2025, provided regional tensions subside with some progress on reforms and an IMF program in place.”

The adoption of the 2024 budget law, aligning the exchange rate closer to market rates, has provided some stabilization, but Lebanon’s economy remains vulnerable.

Regional outlook for 2024 and beyond

Economic growth in the Southern and Eastern Mediterranean region is set to face a challenging year in 2024, with countries contending with the impacts of conflict, slowing investments, and climate-related disruptions, according to the report.

Growth is forecast at 2.1 percent for the first half of the year, rising modestly to 2.8 percent for the full year. This marks a downward revision from earlier estimates, driven primarily by slower-than-anticipated investment recovery in Egypt and the ongoing conflicts in Gaza and Lebanon.

The outlook, however, remains uncertain and depends on several factors, including the resolution of ongoing conflicts, a rebound in private and public investments, and effective responses to climate challenges. 

Severe droughts in Morocco and Tunisia, alongside energy sector disruptions in Egypt, continue to pose significant risks to the region’s growth potential.

The report underscores the urgent need for continued reforms and stabilization efforts across the SEMED region to ensure sustained economic growth in the coming years.

Egypt: Slow recovery amid energy sector disruptions

Egypt, one of the region’s largest economies, is expected to have grown by 2.7 percent in the fiscal year that ended in June, rising to 4 percent in 2024-25 as the country continues its recovery from a prolonged period of economic strain.

On a calendar-year basis, growth is forecast at 3.2 percent in 2024 and 4.5 percent in 2025, marking a steady return to pre-crisis levels, according to the EBRD.

The recovery is being bolstered by expansions in sectors such as retail, wholesale trade, agriculture, communications, and real estate. 

However, the energy sector continues to face disruptions, and inflation, while moderating, remains a challenge at 25.7 percent as of July, down from its peak of 38 percent in September 2023.

“The budget deficit stood at 3.6 percent of GDP in FY24 (fiscal year ending June) and the debt-to-GDP ratio is expected to fall to 83 percent in FY25,” the report said.

Egypt’s external accounts have recovered since the devaluation of its currency in March, with foreign exchange reserves reaching a five-year high. 

Financial inflows from international partners and investors have also provided critical support. However, risks remain, particularly with continued disruptions in energy supply and delays in structural reforms under the IMF program.

Jordan: War in Gaza weighs on economic prospects

Jordan’s economy is forecast to grow at a slower rate of 2.2 percent in 2024, with the ongoing Gaza conflict having a pronounced impact on its tourism sector and investment flows. 

The conflict has increased uncertainty among consumers, who are now holding back on large expenditures, further dampening growth. 

The EBRD said a modest recovery to 2.6 percent growth is possible by 2025, contingent on an easing of geopolitical tensions and continued progress on economic reforms.

“Jordan’s heavy reliance on imports makes it vulnerable to geopolitical instability in the region, as well as to shocks in energy and food prices and disruptions in global supply chains,” the report explained.

The country’s inflation remains moderate, standing at 1.9 percent in July, but unemployment remains persistently high at 21.4 percent, with significantly higher rates for women – 34.7 percent – and the youth population at 43.7 percent. 

The Central Bank of Jordan has maintained a stable policy interest rate, following the lead of the US Federal Reserve, as part of its efforts to preserve the currency peg.

Morocco: Agricultural struggles amid drought, tourism recovery

Morocco is grappling with severe drought, which is affecting its agricultural output — a key driver of the country’s economy. 

Growth is expected to reach 2.9 percent in 2024, with a rise to 3.6 percent in 2025, driven by a recovery in the manufacturing and tourism sectors, the EBRD forecasts.

The easing of inflation, which fell to 1.3 percent in July, has provided some relief, while exports and domestic demand continue to support economic activity. 

Morocco’s government has embarked on fiscal consolidation measures, reducing the budget deficit to 4.3 percent of GDP in 2023. The outlook for 2025 is more positive, provided that weather conditions improve and agricultural output recovers.

Downside risks remain for Morocco due to its dependence on energy imports and the vulnerabilities posed by climate change. 

Severe droughts are expected to weigh on growth in the short term, but the country’s recovery in tourism, remittances, and exports of automobiles and electric products should help sustain moderate growth.

Turkiye’s economic shift toward orthodoxy

In 2023, Turkiye reverted to more conventional economic policies, tightening monetary and fiscal measures to combat inflation. 

The Central Bank raised the policy rate by 4,150 basis points, holding it at 50 percent, while the Treasury’s efficiency package aimed to reduce the fiscal deficit, excluding earthquake-related expenses. 

The decision to forgo a mid-year minimum wage hike in July helped stabilize inflation expectations. 

Investor confidence improved with Turkiye’s removal from the Financial Action Task Force grey list, as indicated by a drop in credit default swap premiums and upgrades in sovereign ratings. The current account deficit shrank to $19.1 billion in July, while foreign exchange reserves increased to $147.9 billion. 

The economy grew by 3.8 percent in the first half of 2024, down from 4.6 percent a year earlier, with private consumption still leading growth despite a slowdown in manufacturing. 

Annual inflation fell to 52 percent in August from a peak of 75.4 percent in May, necessitating continued tight monetary policy to meet the revised inflation target of 41.5 percent by year-end. 

Economic growth is forecasted to decline to 2.7 percent in 2024, amid risks from high inflation and geopolitical tensions.

Tunisia: Modest growth but ongoing fiscal struggles

Tunisia’s economy is expected to post modest growth of 1.2 percent in 2024, rising slightly to 1.8 percent in 2025. 

While inflation has decreased to a 30-month low of 7 percent as of July, the country continues to face significant economic challenges. These include a large external debt burden, limited fiscal space, and vulnerability to external shocks, according to the report.

Despite contractions in agriculture and mining, Tunisia has experienced growth in tourism, financial services, and other industrial sectors, providing some support to the economy.

Tunisia’s fiscal struggles have been partially alleviated by an improvement in the current account deficit and higher tax revenues. 

However, the country’s reliance on external funding and its slow progress on IMF-supported programs continue to pose significant risks to its economic stability.


Saudi Arabia to showcase $100bn aviation investment opportunities at WEF

Updated 9 min 10 sec ago
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Saudi Arabia to showcase $100bn aviation investment opportunities at WEF

RIYADH: Saudi Arabia’s General Authority of Civil Aviation is set to present over $100 billion in investment opportunities at the World Economic Forum in Davos, taking place from Jan. 20 to 24.

The Saudi House Pavilion will serve as the venue for showcasing critical aviation projects, encompassing airports, airlines, cargo logistics, and ground services, according to GACA statement.

These initiatives are central to the Kingdom’s ambitious strategy to establish itself as a global aviation hub.

According to the statement, at the heart of the presentation will be the allocation of $50 billion for the expansion and modernization of major airports. An additional $40 billion will be dedicated to new aircraft acquisitions, while $10 billion will be directed toward creating advanced logistics hubs at key airports in Riyadh, Jeddah, and Dammam.

Mohammed Al-Khurais, GACA’s executive vice president of strategy and business intelligence, underscored the scope of the investments.

“Saudi Arabia is offering aviation opportunities on an unprecedented scale. Through our ambitious Saudi Aviation Strategy, we aim to triple passenger traffic, expand to 250 destinations, and handle 330 million passengers and 4.5 million tonnes of cargo annually.”

The pavilion, organized by the Ministry of Economy and Planning, will host high-level discussions and key announcements. Among the speakers will be Abdullah Al-Dubaikhi, Saudi Arabia’s assistant minister of investment, as well as executives from major aviation players, including Archer Aviation and Jeddah Airport.

The GACA statement said panel discussions will focus on high-profile projects such as the King Salman International Airport in Riyadh, a sprawling mega-hub featuring six runways. There will also be dialogue surrounding public-private partnerships aimed at upgrading regional airports.

Beyond traditional infrastructure, the showcase will explore emerging sectors within aviation, such as cargo and logistics, Advanced Air Mobility, and business aviation.

This forward-thinking approach highlights Saudi Arabia’s commitment to not only modernizing its air transport network but also shaping the future of global aviation.

The Saudi pavilion will serve as a dynamic platform to present the Kingdom’s economic vision, fostering collaboration between global leaders, innovators, and investors, the statement said.

Aviation, positioned as a cornerstone of Saudi Arabia’s Vision 2030, is expected to play a pivotal role in transforming the Kingdom into a leading force in the global aviation industry.


Kingdom’s ‘Saudi House’ to showcase transformation in Davos

Updated 20 sec ago
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Kingdom’s ‘Saudi House’ to showcase transformation in Davos

  • Saudi Minister of Economy and Planning Faisal Alibrahim sees WEF annual meeting as a platform for dialogue and collaboration
  • Says centralized hub to serve as meeting point for Saudi government officials, business leaders and other stakeholders

RIYADH: This year, the Saudi delegation to the annual meeting of the World Economic Forum in Davos, Switzerland, will feature, for the first time, a “Saudi House.”

The centralized hub will serve as a meeting point for government officials, business leaders, and other stakeholders participating in the forum.

“Saudi House was designed to facilitate the participation of all the (Saudi) government entities taking part in Davos in one location,” Faisal Alibrahim, the Saudi minister of economy and planning, said in an interview with Arab News.

“We think putting everyone in one place will create the vibrancy that can demonstrate and echo the vibrancy we are seeing here in the Kingdom.”

Speaking ahead of the trip, he spoke of the importance of the Davos summit as a platform for dialogue and collaboration.

“We’re going there because the Kingdom today is a more integrated player,” Alibrahim said.

“We’ve learned more about what we need to do and what we need to achieve, but we also learned more about what we can offer to our partners, to people from all around the world,” he added.

Using this opportunity to create a positive impact on the global economy, Alibrahim will champion a key call in Davos for global leadership to move beyond tepid economic growth and embrace a more ambitious, “intrepid leadership-led” approach.

“Today, the world is looking at two things that sometimes can be seen as in conflicting directions,” he said. “One, we’re at this tepid growth trajectory today, between 2.7 percent and 3.2 percent, according to the World Bank or the IMF, and we’ve been in this economic stalemate for a few years for various reasons.”

He highlighted the stark contrast between this sluggish economic growth and the immense potential unlocked by technological advancements and innovation.

Alibrahim argued that a new era of “intrepid leadership-led” growth is essential to bridge this gap. “We need bold leadership,” he said. “We need to move from tepid growth to intrepid leadership-led growth that can really bring the two together and unlock the potential of the globe. That’s the wider theme.”

This is part of a full interview with Alibrahim, which discussed the importance of a stable Middle East for global prosperity, attracting foreign investment, how the Kingdom is shielded from external shocks and geopolitics, and balancing ambitious giga-projects with prudence, among other topics.


Saudi Arabia issues nearly 522K commercial records in 2024

Updated 19 January 2025
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Saudi Arabia issues nearly 522K commercial records in 2024

  • 2024 saw 368,038 registrations from establishments and 153,931 from companies
  • Number of commercial records granted in 2023 was 368,038

JEDDAH: Saudi Arabia experienced a 60 percent increase in commercial records in 2024, with a total of 521,969 issued, compared to the previous year, according to the Ministry of Commerce.

The number of commercial records granted in 2023 was 368,038, the ministry said in a statement outlining its achievements for 2024.

Last year, there were 368,038 registrations from establishments and 153,931 from companies, bringing the total number of active commercial records in the Kingdom to 1,606,169.

This comes as Saudi Arabia is driving economic diversification to reduce reliance on oil, aiming to boost the private sector’s share of gross domestic product from 40 percent to 65 percent by 2030. 

Central to this transformation is cultivating an economy fueled by entrepreneurship and innovation, with small and medium enterprises expected to increase their contribution from 20 percent to 35 percent by the end of the decade.

The ministry said the 2024 registrations encompassed a wide range of economic activities, with wholesale and retail trade, construction, accommodation, food services, and manufacturing industries, dominating the list.

Over the past three months, the Kingdom’s commercial records have experienced remarkable growth, driven by the implementation of the New Companies Law, which came into effect in early 2023. The rule introduced significant reforms to facilitate business processes and foster a more dynamic corporate environment.

By the end of the third quarter of 2024, commercial records surged to 389,413, up from 230,762 before the law’s enactment, according to the ministry.

Key reforms under the rule include streamlined procedures for establishing joint-stock companies, remote participation for shareholders, and enhanced financing options, such as allowing limited liability companies to issue debt instruments.

The changes have simplified company formation and introduced flexible financing avenues, reshaping the corporate landscape.

The law also promotes broader ownership by easing the purchase of shares and equity stakes. Notable innovations include the introduction of a simplified joint-stock company model and provisions accommodating non-profit organizations. Additionally, reforms enable sole proprietorships to transition into any company type, modernize rules for mergers and transformations, and allow for company splits.

Small and micro enterprises benefit from reduced compliance burdens, as they are exempt from the requirement of an external auditor. 

The law also enhances digital services, facilitating remote shareholder meetings and decision-making. Furthermore, it removes restrictions across all stages of company formation, operation, and dissolution.


Closing Bell: Saudi main index rises to close at 12,331 

Updated 19 January 2025
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Closing Bell: Saudi main index rises to close at 12,331 

RIYADH: Saudi Arabia’s Tadawul All Share Index rose on Sunday, gaining 75.81 points, or 0.62 percent, to close at 12,331.87. 

The total trading turnover of the benchmark index was SR5.39 billion ($1.43 billion), as 148 of the stocks advanced and 78 retreated.    

Similarly, the Kingdom’s parallel market Nomu gained 101.41 points, or 0.32 percent, to close at 31,600.12. This comes as 49 of the listed stocks advanced, while 38 retreated.    

The MSCI Tadawul Index gained 10.75 points, or 0.70 percent, to close at 1,546.53.     

The best-performing stock of the day was Saudi Cable Co., which debuted on the main market on Sunday, with its share price surging 9.85 percent to SR113.80. 

Other top performers included Middle East Specialized Cables Co., with its share price rising 6.43 percent to SR45.50, and Zamil Industrial Investment Co., which saw its share price surge 5.65 percent to SR36.45. 

Saudi Reinsurance Co. recorded the biggest drop, with its share price falling 2.27 percent to SR56.00. 

Almoosa Health Co. saw its stock price decline by 2.60 percent to SR138.20, while Wataniya Insurance Co.'s share price dropped 1.75 percent to SR25.20.  

On the announcements front, Almarai Co. reported its consolidated financial results for the year ended Dec. 31. According to a Tadawul statement, the company posted a net profit of SR2.3 billion in 2024, marking a 12.8 percent increase compared to 2023. This growth was driven by higher revenue, disciplined cost control, and a favorable product mix. 

Despite the positive results, Almarai Co.’s share price ended the session at SR58.50, down 1.72 percent. 

City Cement Co. has signed a natural gas supply agreement with Saudi Aramco under the supervision of the Liquid Fuel Displacement Program. According to a bourse filing, the agreement aligns with efforts by the Ministry of Energy and the Ministry of Industry and Mineral Resources to achieve the program's objectives. 

The filing also noted that the shift from liquid fuel to natural gas is expected to reduce emissions from the company’s production processes and enhance operational reliability. The financial impact of the agreement will be disclosed at a later date. 

City Cement Co.’s share price closed the session at SR18.80, up 1.17 percent. 

Saudi Arabian Mining Co., or Ma’aden, has provided an update on the development of its third phosphate fertilizer manufacturing project. According to a Tadawul statement, none of the associated contracts involve related parties, and the financial impact of these contracts remains unclear and will be disclosed once available. 

Ma’aden’s share price closed the session at SR48.60, up 1.66 percent. 


Saudi Arabia’s participation at WEF strengthens global push for innovation, AI

Updated 19 January 2025
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Saudi Arabia’s participation at WEF strengthens global push for innovation, AI

RIYADH: Saudi Arabia’s active participation in the World Economic Forum underscores its commitment to advancing global initiatives aimed at enhancing the digital economy, fostering innovation, and leveraging artificial intelligence, a senior official has stated. 

Minister of Communications and Information Technology Abdullah Al-Swaha emphasized that the Kingdom’s presence at the annual Davos meeting, held from Jan. 20 to 24, comes at a pivotal moment as the world transitions from the digital age to the era of artificial intelligence. 

Saudi Arabia’s participation aligns with its National Strategy for Data and AI, which seeks to position the country among the top 10 nations on the Open Data Index and the top 20 in peer-reviewed data and AI publications by 2030.  

The strategy also aims to attract SR30 billion ($7.9 billion) in cumulative foreign direct investment and SR45 billion in local investment in data and AI by the same year. 

In a statement to the Saudi Press Agency, Al-Swaha noted that the forum offers a global stage to showcase the Kingdom’s developmental, economic, and technological progress under the framework of Vision 2030. 

He highlighted Saudi Arabia’s collaboration with the international community to harness AI as a vital tool for propelling sustainable development and achieving shared global objectives.  

He underlined that these endeavors aim to enhance quality of life, bolster the digital economy, and generate fresh employment opportunities across diverse sectors, all contributing to a sustainable and prosperous future for everyone. 

Earlier this month, the Ministry of Communications and Information Technology, in collaboration with King Abdullah University of Science and Technology and consultancy firm Hello Tomorrow, released a report highlighting Saudi Arabia’s advancements in deep technology. 

The report revealed that up to 50 percent of the Kingdom’s deep tech startups are focused on developing artificial intelligence and the Internet of Things. It also noted that more than 43 high-growth startups in Saudi Arabia collectively secured over $987 million in funding by 2022. 

The funding surge was attributed to a rapidly expanding investment ecosystem, which ranked among the top three in the Middle East and North Africa for funding volume and deals. 

In September 2024, an analysis by global consulting firm Strategy& Middle East projected that Saudi Arabia’s technology sector could achieve an SR15 billion increase in operating profit by 2028 through the adoption of generative AI. 

The study suggested that a 15-percentage-point margin growth is attainable if technology companies capitalize on the demand for advanced hardware and infrastructure while developing and commercializing new generative AI use cases.