GCC trade set to grow 5.5% annually, reaching $2.3 trillion by 2033: BCG report

The GCC’s ability to position itself as a key player in emerging trade corridors will determine its long-term economic resilience and influence in the global marketplace. Shutterstock
Short Url
Updated 29 January 2025
Follow

GCC trade set to grow 5.5% annually, reaching $2.3 trillion by 2033: BCG report

  • China is set to emerge as the largest growth market for GCC trade, with exchange volumes increasing by $88 billion
  • Japan follows closely, with an expected increase of $46 billion

RIYADH: The Gulf Cooperation Council’s trade sector is set to grow at an annual rate of 5.5 percent, reaching $2.3 trillion by 2033, according to a new report by Boston Consulting Group.

The BCG analysis highlights a robust outlook for GCC trade, driven by significant expansion across multiple corridors.

The region’s non-hydrocarbon trade is also set to expand by 3.5 percent annually, reinforcing the success of economic diversification efforts.

Global trade is expected to grow at an average rate of 2.9 percent annually through 2033, according to the report.

The expansion is driven by evolving partnerships and advancements in supply chain technology. As economies adapt to post-COVID-19 disruptions and regulatory changes, new trade corridors are emerging, particularly between the Global South and established markets. The shift creates significant opportunities for regions like the GCC to enhance their roles in global commerce.

Commenting on the developments, Rami Rafih, managing director and partner at BCG, said the reconfiguration of global trade flows presents a transformative opportunity for the GCC.

“As trade routes evolve, the region is not merely a geographic intermediary but a central orchestrator of emerging trade patterns,” he said, adding: “The GCC’s proactive investment in trade capabilities positions it to shape the future of global commerce.”

China is set to emerge as the largest growth market for GCC trade, with exchange volumes increasing by $88 billion at a compound annual growth rate of 5.7 percent.

Japan follows closely, with an expected increase of $46 billion, reflecting a 9.4 percent annual growth rate.

The report, titled “Great Powers, Geopolitics, and the Future of Trade,” underscores the GCC’s strategic positioning as a vital link between East and West, benefiting from shifting global patterns.

With China’s trade with the Global South projected to increase by $1.25 trillion and transactions between developing nations expected to rise by $673 billion by 2033, the GCC is set to capture a substantial share of this evolving landscape.

Beyond its traditional reliance on hydrocarbon exports, the GCC’s non-oil trade is gaining momentum, fueled by regulatory enhancements, expanding infrastructure, and strategic agreements.

The shift aligns with the region’s broader economic diversification efforts under national transformation plans.

The report also highlights major global trade realignments that could benefit the GCC.

North America is solidifying its resilience, with US-Mexico business forecast to grow by $315 billion by 2033, while the Association of Southeast Asian Nations is set to achieve a 3.7 percent annual growth rate.

India is emerging as a critical player, with total trade expected to reach $1.8 trillion annually by 2033.

As the Global South gains economic influence, representing 18 percent of the international gross domestic product and 62 percent of the world’s population, trade among developing nations is expected to expand significantly.

Annual exchange within these regions is set to rise by $673 billion over the next decade, while trade between the Global South and developed economies is projected to hit $1.67 trillion annually by 2033.

To capitalize on these shifting dynamics, the report outlines key strategies for business leaders in the GCC, emphasizing supply chain resilience and expansion into high-growth markets like India and China.

It also encourages investment in nearshoring strategies to leverage the region’s strategic position.

“Success will depend on cultivating deep market intelligence, robust scenario planning, and strategic partnerships,” Cristian Rodriguez-Chiffelle, partner and director for trade and investment at BCG, said.

With global trade undergoing rapid transformation, the GCC’s ability to position itself as a key player in emerging trade corridors will determine its long-term economic resilience and influence in the global marketplace.


OPEC Fund in talks with Lebanon to launch key economic support initiative

Updated 16 February 2025
Follow

OPEC Fund in talks with Lebanon to launch key economic support initiative

RIYADH: The OPEC Fund for International Development is currently in talks with Lebanese authorities for a significant intervention, the institution’s president announced.

In an interview with Arab News on the opening day of the AlUla Conference for Emerging Market Economies, Abdulhamid Al-Khalifa shared that the fund is working with Lebanon to determine the optimal timing and approach to ensure the greatest impact on the country’s development.

This initiative is in line with the OPEC Fund’s ongoing commitment to global development, having already invested around $27 billion in projects across more than 125 countries. It also aligns with the fund’s mission to foster development, strengthen communities, and empower individuals.

“As you know, OPEC Fund is, as I said, a development institution and those institutions are created to take additional risks when it comes to development and they are what they call it counter-cyclical, when a country faces major issues, these institutions, intervene with high risk, but their objective is maximizing development impact, not maximizing returns on their assets,” Al-Khalifa said.

The president further emphasized that such institutions are not political in nature; instead, their focus is solely on driving development.

Al-Khalifa explained that the OPEC Fund has both a public sector arm and a private sector arm.

He added that the fund was already involved in investment projects in Lebanon through both arms and windows.

However, he noted that the approach depended on the circumstances and the right timing for intervention.

He mentioned that the fund was working with the authorities in Lebanon and looked forward to carrying out the intervention in the near future.

During the interview, the president also highlighted that while the region as a whole has significant potential, it also faces major risks, including geopolitical ones.

Al-Khalifa mentioned that some countries in the region were emerging from such risks, and expressed hope that this would help the region move forward. He added that the future held great potential and significant economic prospects for the region, particularly for the countries emerging from conflicts.

He added: “But also, you have countries that are stable and they are also doing well when it comes to economic development like GCC countries and also some Middle Eastern and North African countries.”

Al-Khalifa expressed his optimism about the future of the region but said: “It depends on many circumstances and depends on many risks that has to be mitigated.”

The president also highlighted that the OPEC Fund was established 50 years ago, with Saudi Arabia being one of the most important establishing members.

Al-Khalifa stated that the fund was focusing its efforts on development in both middle-income and low-income countries. He noted that Saudi Arabia, as the fund’s major shareholder, was supporting these countries through the OPEC Fund platform, which was one of the platforms Saudi Arabia uses to promote global development.

“As you know, Saudi Arabia is one of the major donors around the world when we compare it to GDP and they are processing their assistance through their bilateral institutions, but also they are using multilateral platforms like the World Bank, OPEC Fund, Islamic Development Bank and other regional banks,” he added.


Pakistan sees Saudi Vision 2030 as model for its economic transformation

Updated 16 February 2025
Follow

Pakistan sees Saudi Vision 2030 as model for its economic transformation

RIYADH: Saudi Arabia’s influence in regional economic transformation is expanding, with Pakistan acknowledging the Kingdom’s progress under Vision 2030 as a valuable model, according to a senior official.

In an interview with Arab News during the AlUla Conference for Emerging Market Economies, Pakistan’s Finance Minister Muhammad Aurangzeb emphasized that Saudi Arabia’s leadership in economic reforms offers important lessons for Pakistan as it embarks on its own structural changes.

“Pakistan and the Kingdom of Saudi Arabia have been long-standing partners, one of the strongest partnerships that we have,” Aurangzeb said.

“As we go through our own structural reforms at this point in time, on the back of the macroeconomic stability that we have achieved, there’s a lot to learn from Vision 2030,” the minister said.

He also stated that the Kingdom is well ahead of its targets of Vision 2030, “so there’s so much to learn in Pakistan from our partners in Saudi Arabia.”

Saudi investments 

The finance minister also highlighted the growing Saudi investments in Pakistan, particularly in the business-to-business sector. He pointed to recent developments such as Saudi Aramco’s foray into the downstream petroleum industry and ongoing talks concerning government-to-government agreements.

“We’ve already had a few investments coming through from Saudi Arabia in the B2B space, and then of course, we have just seen Aramco coming into downstream, so these are all very, very good investments,” Aurangzeb said.

“There are a number of G2G transactions which are underway at this point in time to be announced later in the year.”

Aurangzeb underscored the potential for boosting exports from Pakistan to Saudi Arabia, especially in the skilled labor sector.

He noted that this aligns with the Kingdom’s expanding workforce needs as it progresses toward its Vision 2030 objectives.

The minister added: “Meanwhile, we remain grateful for the support that we have received from Saudi Arabia, especially with respect to our IMF program.”

The minister noted that the conference serves as an important multilateral platform to discuss economic resilience and cooperation among emerging economies.


Saudi Arabia emerging as an economic ‘powerhouse,’ says top IMF official

Updated 16 February 2025
Follow

Saudi Arabia emerging as an economic ‘powerhouse,’ says top IMF official

RIYADH: Saudi Arabia’s role in the international financial system is growing, solidifying its position as an emerging economic “powerhouse,” according to a senior executive. 

In an interview with Arab News on the sidelines of the AlUla Conference for Emerging Market Economies, Jihad Azour, director of the Middle East and Central Asia department at the International Monetary Fund, stated that the Kingdom took a leadership role following the G20 summit in 2020. 

“The role of Saudi in the international financial system is growing. It’s an emerging global power. Now, after the G20 in 2020, Saudi is chairing the IMFC, which is the government body of the IMF,” Azour said. 

He continued: “Also, Saudi is very active in a certain number of global initiatives, like the debt relief initiative through the common framework, as well as also a certain number of important initiatives related to the role of emerging markets” and their contribution in setting global priorities.

Azour also noted that despite enduring multiple global economic shocks over the past five years, beginning with the COVID-19 crisis, the Kingdom has sustained strong economic growth. 

This resilience is largely attributed to government policies aimed at diversifying the economy beyond its reliance on oil. Fiscal policies have played a crucial role in strengthening economic management and stability. 

“Accelerating economic transformation has been beneficial to the GCC countries, in particular to Saudi. It helped maintain a high level of growth despite the various shocks that the region and Saudi economy faced over the last five years, starting from the COVID crisis and going on with several other global shocks,” he said, 

Azour added: “The investment in structural reforms that has increased women participation in the economy, improved the quality of infrastructure accelerated the trend in digitalization, has also contributed to accelerate the level of growth. 

Furthermore, large-scale infrastructure and development projects have played a key role in building a more prosperous future for the Kingdom by fostering economic expansion and modernization, Azour further elaborated.

The conference is set to deliver key recommendations to bolster financial stability and drive sustainable growth in emerging economies. 

Experts will also delve into the role of artificial intelligence and digital transformation in accelerating economic development across these markets.  

Discussions will focus on strategies to enhance economic resilience, fostering stronger collaboration between emerging and advanced economies to pave the way for a more equitable and sustainable global future.


Closing Bell: Saudi main index slips to close at 12,372 

Updated 16 February 2025
Follow

Closing Bell: Saudi main index slips to close at 12,372 

  • Parallel market Nomu gained 121.76 points, or 0.39%, to close at 31,737
  • MSCI Tadawul Index lost 1.11 points, or 0.07%, to close at 1,537.16

RIYADH: Saudi Arabia’s Tadawul All Share Index slipped on Sunday, losing 12.93 points, or 0.10 percent, to close at 12,372.07. 

The total trading turnover of the benchmark index was SR4.1 billion ($1.09 billion), as 85 of the stocks advanced and 137 retreated.    

However, the Kingdom’s parallel market, Nomu, gained 121.76 points, or 0.39 percent, to close at 31,737, as 44 stocks advanced while 40 declined. 

The MSCI Tadawul Index lost 1.11 points, or 0.07 percent, to close at 1,537.16.     

The best-performing stock of the day was AYYAN Investment Co., whose share price surged 4.67 percent to SR17.48.   

Other top performers included Tanmiah Food Co., which climbed 4.27 percent to SR132, and Ash-Sharqiyah Development Co., which surged 4.16 percent to SR22.52. 

Saudi Reinsurance Co. declined 3.28 percent to SR56.00, while Savola Group slipped 2.84 percent to SR37.65. 

On the announcements front, Dr. Sulaiman Al-Habib Medical Services Group reported its annual financial results for the period ending Dec. 31. According to a Tadawul statement, the company posted a net profit of SR2.3 billion in 2024, marking a 13.16 percent increase from 2023. The growth was driven by higher revenue, attributed to a surge in patient numbers and increased inpatient occupancy. 

The firm also announced its board of directors’ recommendation to distribute SR430.5 million in cash dividends to shareholders for the fourth quarter of the 2024 fiscal year.

A bourse filing showed that 350 million shares are eligible for dividends, with a payout of SR1.23 per share. The statement further noted that the dividend-to-par value ratio stood at 12.3 percent.  

Dr. Sulaiman Al-Habib Medical Services Group closed at SR300, down 0.87 percent.  

Umm Al-Qura for Development and Construction Co. announced the start of the institutional book-building period for its initial public offering, which comprises 130.7 million new ordinary shares for public subscription, representing 9.09 percent of the company’s shares post-capital increase. 

A Tadawul statement revealed that the price range for the offering has been set between SR14 and SR15 per share. The minimum subscription for participating parties is 100,000 ordinary shares, while the maximum allocation is 71.9 million shares. 

Meanwhile, Tanmiah Food Co. reported its annual financial results for the period ending Dec. 31. A bourse filing showed the company recorded a net profit of SR95.8 million in 2024, marking a 26.2 percent increase from the previous year. The rise in profit was primarily driven by operational efficiencies and cost optimization. 


Gulf economies more resilient amid high energy prices: QCB governor 

Updated 16 February 2025
Follow

Gulf economies more resilient amid high energy prices: QCB governor 

  • Bandar bin Mohammed bin Saoud said strong oil and gas revenues have allowed Gulf nations to build financial buffers over the past few decades
  • He was speaking at the AlUla Conference for Emerging Market Economies in Saudi Arabia

RIYADH: High energy prices have strengthened the economies of Gulf Cooperation Council countries, making them less vulnerable compared to other regions, according to the governor of the Qatar Central Bank. 

Speaking at a panel discussion titled “Resilience of the Financial System in Emerging Markets” on the first day of the AlUla Conference for Emerging Market Economies, Bandar bin Mohammed bin Saoud Al-Thani attributed this resilience to sovereign wealth funds, disciplined fiscal policies, and ongoing economic diversification efforts.  

The remarks align with projections that the region’s gross domestic product growth will nearly double to 3.6 percent in 2025, compared to a global forecast of 2.8 percent, according to Oxford Economics. Credit rating agency S&P Global also expects GCC banks to maintain strong asset quality, profitability, and liquidity through 2025.  

“In our region, which is the Middle East and North Africa, I look at it in two parts. The first part is GCC countries. GCC countries are less vulnerable, and they’re more resilient because of several factors,” Al-Thani said. 

He said that strong oil and gas revenues have allowed Gulf nations to build financial buffers over the past few decades, supporting their economies in times of uncertainty. “The third is the fiscal disciplines. Most of the GCC countries have a disciplined fiscal policy. Fourth, in my point of view, is that most of the GCC countries came up with a plan of diversifying their economies and they started to execute this plan,” he said. 

Al-Thani also provided a global comparison, noting that while the US economy remains strong, with robust job markets and contained — but still elevated — inflation, other regions face different challenges. 

The panel also explored financial sector trends in the Arab region, with Fahad Al-Turki, director general chairman at the Arab Monetary Fund, highlighting the dominance of banks. 

“The financial sector within the Arab region is dominated by the banking sector — around 93 percent of the financial sector is banking, which represents around 145 percent of the GDP from the region; this compares to 220 percent in advanced economies,” Al-Turki said. 

He said in the GCC, the banking sector’s contribution reaches about 240 percent of GDP. “There are three countries that account for almost two-thirds of the banking sector in the whole Arab region, and these countries are Saudi Arabia, the UAE, and Qatar,” he said. 

The governor of the Central Bank of Azerbaijan, Taleh Kazimov, addressed the broader economic implications of geopolitical tensions, citing inflation, changes in international settlements, and regulatory shifts as key concerns.   

Meanwhile, Andriy Pyshnyi, governor of the National Bank of Ukraine, underscored the distinct challenges facing his country’s financial system. 

“Their activity and operations of the National Bank of Ukraine are defined by the war. The country that has been resisting a full-scale invasion for three years and therefore all processes that in one way or another define the logic of our actions, our policies, decisions, position are determined with the aim to ensure macro-financial stability in the conditions of the full-scale war,” Pyshnyi said.  

The AlUla Conference for Emerging Market Economies, organized by the International Monetary Fund and Saudi Arabia, aims to tackle global economic challenges. The two-day event brings together finance ministers, central bank governors, policymakers, and leaders from the public and private sectors, alongside international institutions and academic experts.