KSA Economy News & Discussions

[al-Hasani]

‘Cityscape’ captures real estate boom in Kingdom

Prince Mishaal Bin Majed, governor of Jeddah, views a real estate project model after inaugurating the 5th edition of 'Cityscape Jeddah' on Sunday. – SPA​

Last updated: Monday, May 05, 2014 12:11 AM

Saudi Gazette report

JEDDAH – Prince Mishaal Bin Majed, governor of Jeddah, opened here on Sunday the three-day Jeddah Urban Development and Real Estate Investment Exhibition ‘Cityscape Jeddah 2014.’

President of the Board of Directors of National Exhibitions Company, the organizing agency of Cityscape Jeddah 2014, Dr. Abdullah Bin Mahfouz, said the exhibition includes workshops on Jeddah Real Estate Summit and awards ceremony for real estate development and architectural design in the Kingdom.

“We have noticed increased participation from regional real estate companies attracted by the opportunities in Saudi Arabia’s real estate sector which is thriving in the Kingdom’s prosperous and stable economic climate,” said Mahfouz.

Eng. Ahmed Abu Alola, Director of Operations and Developments at Ewaan Global Residential Company, said the Saudi government aims to increase home ownership to 80% of the population by 2024 through affordable housing. As a result, private and public developers need to build a total of 1.65 million homes over the next six years. Looking at the longer term, a minimum of 150,000 new units are needed per year to fill the housing shortage over the next 10 years, he said.

“This will bring major opportunities for the Kingdom’s real estate, construction and home financing companies. But construction management remains an internal challenge for the developers in Saudi Arabia and there is an urgent need to adopt global best practices and technologies to address this issue,” said Abu Alola.

One such technology is Autoclaved Aerated Concrete (AAC) which has been pioneered in Ewaan’s flagship Alfareeda residential community.

Cityscape Jeddah is always at the forefront of innovation, and this year several exhibitors are displaying the technical advancements. One such exhibitor is Sumou Real Estate Company which is showcasing a 4D simulation of their projects for the first time ever.

Commenting on how Cityscape Jeddah is an important contributor to the growth and development of the Kingdom’s real estate sector, keynote speaker at the Jeddah Real Estate Summit, Hisham Malaika, Partner and Head of Property and Social Infrastructure at Arcadis in Saudi Arabia, said: “The Jeddah Real Estate Summit at Cityscape Jeddah is the ideal platform to network with the region’s top real estate and investment professionals and collaborate as a whole to strengthen the local real estate industry.”

“The 2014 Global Built Asset Performance Index (BAPI) report reveals Saudi Arabia as the fastest growing market in built asset performance, forecast to grow by 70 percent over the next decade,” he said.

Mounib Hammoud, CEO of Jeddah Economic Company, developer of The Kingdom Tower and City, gave an update on The Kingdom Tower and City development and how it is expected to alter the shoreline’s character, saying: “With the rise of The Kingdom Tower and City, Jeddah will soon have a skyline that will identify the city’s position as an urban and business destination.”

Commenting on the Jeddah property market, Hammoud said: “The property market is in a positive momentum and Jeddah’s real estate topography is being transformed. Saudi Arabia’s growth is at its peak and government spending is the highest ever and this is expected to continue for the next five to 10 years, fueling the economy in the process. As far as the Jeddah real estate market is concerned, the city is home to around 3.5 million people and the population growth rate is about 4%. Jeddah is moving upward and the property market is moving with it. The government is playing a huge role in helping the market to grow and due to the Kingdom having an open economy we are witnessing the formation of a very effective partnership between the public and private sectors.”

‘Cityscape’ captures real estate boom in Kingdom | Economy | Saudi Gazette

@farhan_9909

GDP (nominal) is the most important but it's fairly good news. Aside from GDP (PPP) per capita.

List of countries by GDP (nominal) - Wikipedia, the free encyclopedia

List of countries by GDP (PPP) per capita - Wikipedia, the free encyclopedia


Some of the data on those links is outdated. KSA has grown quit a lot in both of those areas. What matters the most is that KSA's economy is one of the fastest growing.

An interesting thing is that both China and Saudi Arabia (along with the GCC) are the main trade surplus nations in the world, and also amongst the world's largest creditor nations.

We also have ENORMOUS investments abroad.
Let alone a growing population and a constant growth of the non-oil/gas/mining etc. sector. A shift to a knowledge-based economy is already occurring. 200.000 Saudi Arabians are also studying at top universities in the world, mainly in the US and Europe!

So all in all we have a lot to be positive about. I wonder what will happen if some of the moronic laws that hamper economic growth will change as well? Hard for even the biggest pessimist not to be just a little bit positive about the future despite the present already being very good.

 

[al-Hasani]

Promoting employment amongst Saudi Arabian women
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Last updated: Monday, April 14, 2014 06:51AM

Last week, Glowork organized a career fair for women in Saudi Arabia. The three day event started on the 8th of April and was held at Al Faisaliyah Hotel in Riyadh. It was meant to be a space where Saudi women could engage with employers in Saudi Arabia, enabling them to be exposed to various career options and increase their participation in the Kingdoms workforce.

For some time now Saudi Arabia has been carrying out various initiatives to increase participation of nationals in the workforce and specifically in the private sector. Currently there are approximately more than one million women who are unemployed in the Kingdom. According to a report published by The Central Department of Statistics and Information of Saudi Arabia, unemployment rate among Saudi women has been increasing. Between 1999 and 2012, the unemployment rate increased from 16% to 36%. Organization such as Glowork are working hard towards decreasing these numbers.

Glowork is a recruitment company setup by Saudi entrepreneurs with the sole aim of increasing women empowerment. They provide an online platform through which Saudi women can access various career options in Saudi Arabia. Glowork also reaches out to Saudi women through career events such as ‘A Step A Head’.

‘A Step A Head’, held for the second consecutive year included workshops to help Saudi women progress in their chosen career. Large companies such as Philips were also present during the career fair to support women employment and to recruit and train young Saudi talent. The event was a success as over 22,000 graduate students attended the event from various educational backgrounds.

Other initiatives are also underway to increase participation from Saudi women. One such example includes The Human Resources Development Fund project which aims to help Saudi women work from home. The project will give out temporary permits so that women can work from home. Such projects aim to motivate women to join the workforce and at the same time give nationals the chance to get the right documentation needed to work from home.

Literacy rates among Saudi women has drastically increased over the years. In fact the number of women enrolling in to Saudi Universities is greater than Saudi men. Hopefully with organizations such as Glowork and other projects, women will be motivated to join the workforce and lead the Kingdom to further development.

Souqalmal.com is the leading comparison website in the Middle East. Our portal offers consumers the ability to search and compare over 1,500 products online while obtaining detailed information on credit cards, personal loans, car loans, bank accounts, mortgages, insurances, mobile phone plans, broadband plans, schools and nurseries offered by the various providers across the UAE, KSA and Kuwait

Sources: Arab News, Trade Arabia, Albawaba

Saudi Gazette

 

[al-Hasani]

SABIC Chairman: Oil-to-chemicals complex to create 100,000 jobs

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RIYADH: MOHAMMED RASOOLDEEN & ABDUL HANNAN TAGO | ARAB NEWS STAFF

Published — Tuesday 13 May 2014

Last update 13 May 2014 8:57 pm

In a major move, Sabic has announced plans to develop the world’s first oil-to-chemicals complex in the Kingdom.
Prince Saud bin Abdullah bin Thenayan Al-Saud, chairman of SABIC and the Royal Commission for Jubail and Yanbu, said SABIC is in the last stages of preliminary studies to build the world’s first oil-to-chemicals (OTC) complex in Saudi Arabia.
Prince Saud made the announcement as he inaugurated the SABIC Innovation Day.
The project, to be located either in Yanbu or Jubail after the completion of the feasibility studies, is likely to generate more than 100,000 jobs.
The Innovation Day is a showcase of SABIC’s technological achievements around the world.
“Saudi Arabia is on a journey to grow, diversify itself, reduce its energy intensity and move toward a knowledge economy. To this end, it requires the commitment and effective execution of all its engines. Today, we will demonstrate how SABIC is well on the way to transforming itself into a solutions provider to its destination markets and delivering value to its customers via technology. All of this means innovation, which is commercialized invention,” the prince said.
Mohamed Al-Mady, SABIC vice chairman and CEO, welcomed key external stakeholders, including government officials, key SABIC customers, businessmen, academicians, research partners, and media representatives.
Notable speakers included: Professor Vijay Govindarajan, Coxe Distinguished Professor at Tuck at Dartmouth; Professor Jean-Lou Chameau, President of King Abdullah University of Science and Technology (KAUST); and Dr. Mohammad Al-Suwaiyel, President, King Abdulaziz City for Science and Technology (KACST).
In his keynote address, Al-Mady said: “SABIC is today seeing the rewards of innovation leadership and driving the technology agenda in key areas of our business.”
He said: “The OTC complex will set a new competitive standard and establish Saudi Arabia as a technology leader in the petrochemical industry. OTC technology allows for the conversion of crude oil to petrochemical products at the highest ever achieved conversion rate in a competitive and sustainable way.”
The OTC complex will comprise an innovative configuration of unit operations that, in combination, will generate the world’s highest yield conversion of oil to chemicals.
SABIC expects to utilize around 10 million metric tons of crude oil at the complex to produce petrochemicals, and eventually advanced specialty chemicals in line with SABIC’s 2025 strategy.
The complex is expected to start by the end of the current decade and will provide an aggregated total of around 100,000 new jobs, according to current company projections.
The project comes at a time when the company is focussing strongly on research and innovation to produce new materials to face global market challenges.
According to Al-Mady , the plant, which is expected to be operational at the end of this decade, will consume about 10 million tons of crude oil to produce petrochemicals.
“This new technology will enable the Kingdom to extract value added from the crude oil compared to the production of fuel and eventually will improve the level of our income,” Al-Mady said.
SABIC also signed a contract with KAUST with additional support to the university amounting to SR10 million during the event.
To help spur innovation globally, Al-Mady announced an annual Innovation Award to entrepreneurs. SABIC is offering cash awards of up to SR10 million along with research and commercial support for innovative ideas or existing inventions in the field of smart polymers.
Applications will be accepted electronically through the SABIC website from June 1, 2014.
“Every year SABIC screens more than 250 start-ups for possible partnership,” said Al-Mady.
“We hope the SABIC Innovation Award will encourage many more worthy projects.”
“Research is at the heart of everything we do. It’s been the basis of SABIC’s success in the past and is the key to our future growth,” he said, adding that “innovation is our way toward the future. It makes the Kingdom of knowledge and technical based economy with more efficiency energy consuming environment.”
Innovation Day 2014 is designed to convey the breadth and depth of SABIC’s innovation research and technology globally in serving our customers and the community and solving the challenges of the future.
“SABIC’s innovation engine is firing on all cylinders,” he told the attendees.
“Innovation is key to the future not only of SABIC but more broadly for our country. Innovation can make Saudi Arabia a knowledge economy and a more energy efficient environment. But it takes the continued efforts of government, academia and business to generate an ecosystem for growth. We are and will continue to be part of those efforts.”
Ernesto Occhiello, SABIC executive vice president, Technology and Innovation, said SABIC recently filed for its 10,000 patent, a landmark number that establishes the company as the largest patent developer in the Middle East.
On average, SABIC files a new patent every 18 hours, each based on the work of approximately four researchers. This represents greater efficiency than any other top ten companies in the chemical industry, he said.
“Intellectual property is an important tool to help SABIC achieve its 2025 strategy,” he said.
“Our patent estate is one of several indicators we use to measure our return on investment in research and development. Our 10,400 global patent dockets are a reflection of our emphasis on innovation to support our growth.”
Renowned speakers also addressed the event, followed by discussion panels focusing on the importance of innovation for sustainable development.
SABIC’s significant research resources include dedicated Technology and Innovation (T&I) facilities in Saudi Arabia, the US, the Netherlands, Spain, Japan, China, India and South Korea, backed today by more than 10,000 patents.
Innovation Day included a Gallery Walk which captures some of SABIC’s solutions in six critical markets; Agriculture, Packaging, Construction, Transportation, Energy, Consumer Electronics and Nano-technology.

SABIC Chairman: Oil-to-chemicalscomplex to create 100,000 jobs | Arab News — Saudi Arabia News, Middle East News, Opinion, Economy and more.

 

[al-Hasani]

Kingdom heading for real GDP growth of 4.3% in 2014

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JEDDAH: ARAB NEWS

Published — Friday 20 June 2014

Last update 19 June 2014 11:20 pm

The National Commercial Bank (NCB) said in its new report that last year marked the slowest economic growth rate since 2009, and the Kingdom will face a moderate business cycle during 2014 and 2015, growing around 4 percent.
In 2013, growth in aggregate output, real GDP, decelerated to 4 percent, mainly against the backdrop of the negative contribution from the oil sector, stemming from a lower production level. Saudi oil output fell by around 1.6 percent in 2013, averaging 9.64 million bpd, which weighed negatively on the oil sector GDP that declined by 1 percent, the largest contraction since 2009.
Nevertheless, the report said contraction in the oil sector was more than offset by nonoil GDP growth that grew by around 5.4 percent. Importantly, the nonoil private sector increased by 5.97 percent Y/Y, driven by construction, trade, and manufacturing.
The economic growth outlook for 2014 will continue to be driven by nonoil growth, with oil maintaining its negative contribution. The bank projects real GDP growth of 4.3 percent for 2014 due mainly to the nonoil sector maintaining last year’s pace of 5.4 percent, driven by the private sector, mainly manufacturing and construction.
The nonoil sector will be the driving force for economic growth in 2014, remaining above the 5 percent threshold for the third year in a row. Real nonoil GDP in 2013 grew by around 5.4 percent, largely driven by the stellar performance of the non-oil private sector.
The NCB Saudi Economic Perspectives report said private sector maintained its significant contribution to real GDP at 58.9 percent, growing by 5.97 percent, which illustrates the vibrant role that private enterprises are assuming in the Saudi economy. The main drivers of private sector growth were the construction, retail, and the manufacturing sectors, which posted 8.8 percent, 6.6 percent and 5.3 percent annual growth, respectively. This vibrancy of the private sector emanated from the enhanced business confidence and the improved financing environment.
Evidently, the growth in commerce and manufacturing benefited from the pickup in credit, receiving SR28.7 billion and SR13.6 billion, respectively, in incremental loans and advances from banks in 2013, which represents an annual increase of 14 percent and 10.7 percent.
The boost to business confidence underpinned the value of awarded construction contracts that registered an all-time high. One of the promising growth drivers for corporate Saudi is nonoil exports that reached a historical $54.1 billion last year and that will gain momentum, along with domestic demand, given the vertical and horizontal diversification plans that will enhance the absorptive capacity of the economy.

Kingdom heading for real GDP growth of 4.3% in 2014 | Arab News — Saudi Arabia News, Middle East News, Opinion, Economy and more.

Saudi Arabian nonoil exports surge 18.7 percent
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JEDDAH: ARAB NEWS

Published — Friday 20 June 2014

Last update 19 June 2014 11:20 pm

Saudi nonoil exports rose by 18.7 percent in the first quarter of this year, the General Statistical Department said in a report on Thursday. “Total value of exports rose to SR54.82 billion against SR46.19 billion during the same period in 2013,” the report added.
The Kingdom exported products weighing 13.29 million tons against 11.67 million in the previous year, registering an increase of 13.9 percent.
According to the report, Saudi Arabia imported goods worth SR152.15 billion in the first quarter against SR156.81 billion during the same period in 2013, showing a three percent decrease. Total weight of imports declined by 4.4 percent to 18.60 million tons from 19.46 million tons.
“The value of exports compared to imports reached 36 percent in the first half of 2014,” the report said.
Petrochemicals accounted for 33.78 percent of the total exports during the reporting period with their value reaching SR18.52 billion. GCC countries received Saudi products worth SR7.5 billion, the report said.

Saudi nonoil exports surge 18.7 percent | Arab News — Saudi Arabia News, Middle East News, Opinion, Economy and more.
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[Zarvan]

Kingdom heading for real GDP growth of 4.3% in 2014

​

JEDDAH: ARAB NEWS

Published — Friday 20 June 2014

Last update 19 June 2014 11:20 pm

The National Commercial Bank (NCB) said in its new report that last year marked the slowest economic growth rate since 2009, and the Kingdom will face a moderate business cycle during 2014 and 2015, growing around 4 percent.
In 2013, growth in aggregate output, real GDP, decelerated to 4 percent, mainly against the backdrop of the negative contribution from the oil sector, stemming from a lower production level. Saudi oil output fell by around 1.6 percent in 2013, averaging 9.64 million bpd, which weighed negatively on the oil sector GDP that declined by 1 percent, the largest contraction since 2009.
Nevertheless, the report said contraction in the oil sector was more than offset by nonoil GDP growth that grew by around 5.4 percent. Importantly, the nonoil private sector increased by 5.97 percent Y/Y, driven by construction, trade, and manufacturing.
The economic growth outlook for 2014 will continue to be driven by nonoil growth, with oil maintaining its negative contribution. The bank projects real GDP growth of 4.3 percent for 2014 due mainly to the nonoil sector maintaining last year’s pace of 5.4 percent, driven by the private sector, mainly manufacturing and construction.
The nonoil sector will be the driving force for economic growth in 2014, remaining above the 5 percent threshold for the third year in a row. Real nonoil GDP in 2013 grew by around 5.4 percent, largely driven by the stellar performance of the non-oil private sector.
The NCB Saudi Economic Perspectives report said private sector maintained its significant contribution to real GDP at 58.9 percent, growing by 5.97 percent, which illustrates the vibrant role that private enterprises are assuming in the Saudi economy. The main drivers of private sector growth were the construction, retail, and the manufacturing sectors, which posted 8.8 percent, 6.6 percent and 5.3 percent annual growth, respectively. This vibrancy of the private sector emanated from the enhanced business confidence and the improved financing environment.
Evidently, the growth in commerce and manufacturing benefited from the pickup in credit, receiving SR28.7 billion and SR13.6 billion, respectively, in incremental loans and advances from banks in 2013, which represents an annual increase of 14 percent and 10.7 percent.
The boost to business confidence underpinned the value of awarded construction contracts that registered an all-time high. One of the promising growth drivers for corporate Saudi is nonoil exports that reached a historical $54.1 billion last year and that will gain momentum, along with domestic demand, given the vertical and horizontal diversification plans that will enhance the absorptive capacity of the economy.

Kingdom heading for real GDP growth of 4.3% in 2014 | Arab News — Saudi Arabia News, Middle East News, Opinion, Economy and more.

Saudi Arabian nonoil exports surge 18.7 percent
​

JEDDAH: ARAB NEWS

Published — Friday 20 June 2014

Last update 19 June 2014 11:20 pm

Saudi nonoil exports rose by 18.7 percent in the first quarter of this year, the General Statistical Department said in a report on Thursday. “Total value of exports rose to SR54.82 billion against SR46.19 billion during the same period in 2013,” the report added.
The Kingdom exported products weighing 13.29 million tons against 11.67 million in the previous year, registering an increase of 13.9 percent.
According to the report, Saudi Arabia imported goods worth SR152.15 billion in the first quarter against SR156.81 billion during the same period in 2013, showing a three percent decrease. Total weight of imports declined by 4.4 percent to 18.60 million tons from 19.46 million tons.
“The value of exports compared to imports reached 36 percent in the first half of 2014,” the report said.
Petrochemicals accounted for 33.78 percent of the total exports during the reporting period with their value reaching SR18.52 billion. GCC countries received Saudi products worth SR7.5 billion, the report said.

Saudi nonoil exports surge 18.7 percent | Arab News — Saudi Arabia News, Middle East News, Opinion, Economy and more.
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4.3 is less you need to increase it

 

[al-Hasani]

4.3 is less you need to increase it

It's the highest in the region and among the highest (if not the highest) among the G-20 major economies member states outside of the BRIC countries if I am not mistaken.

G-20 major economies - Wikipedia, the free encyclopedia

You cannot expect a growth of 8-10% in the current economic climate in developed economies such as those of KSA. The important thing here is that the driving force is the non-oil sector which is booming and which is only going to increase in the future at a fast speed. One must be realistic though at first.

Net GCC foreign assets set to hit $2.3t at end-2014: IIF​

Issac john / 17 May 2014

With relatively little external debt, net foreign assets of GCC countries are projected rise to $2.3 trillion, accounting for 137 per cent of the region’s economy by the end of 2014, the Institute of International Finance, or IIF, said.

The UAE is projected to see a rise in average inflation from 1.1 per cent to 2.8 per cent. — KT file photo​

The Washington-based global association of financial institutions said the region’s gross financial assets are also on course to rise to $2.8 trillion by year-end as a result of continued large surpluses.

However, the IIF warned that the GCC countries’ fiscal stress could surge over the medium term if oil prices drop sharply while government spending continues to rise.

“Assuming an average Brent oil price of $105 per barrel in 2014 [as compared to $108 per barrel in 2013], the GCC’s external current account surplus, while declining, is expected to remain large at $287 billion in 2014. The consolidated fiscal surplus will also narrow from 10.6 per cent of the gross domestic product in 2013 to 8.3 per cent in 2014, reflecting slightly lower oil prices and higher expenditures,” it said in its regional overview.

This year, overall growth of the GCC is projected to be around four per cent as oil production remains restrained due to increased global supplies and tepid growth in demand, the IIF said. Growth moderated from 5.5 per cent in 2012 to 4.2 per cent in 2013, largely due to a slower rise in crude oil production. Non-hydrocarbon real GDP growth, a more representative measure of economic activity, remained robust at 5.4 per cent in 2013, driven by higher public spending and stronger private sector activity.

The IIF in its review showed GCC countries to make further progress in economic diversification.

“Although hydrocarbon sector’s contribution to GDP has declined steadily, the budget dependence on oil revenues continues to be high,” said George Abed, senior counsellor and director for Africa and the Middle East at the IIF.

GCC private sector growth is projected to rise further to 6.2 per cent in 2014 from 5.9 per cent in 2013, supported by buoyant domestic demand and both private consumption and investment expenditures. Government-sector growth is projected to slow to 3.5 per cent in 2014 from five per cent in 2013 as authorities across the GCC move to begin to rein in expenditure growth, which had been resurgent for nearly a decade.

Economic diversification in the GCC, the IIF noted, continues as signalled by the steady decline in the share of the hydrocarbon sector’s contribution to real GDP from 41 per cent in 2000 to 33 per cent now. “However, GCC countries have not done as well in diversifying their domestic revenue base as the oil and gas sector’s contribution to budget receipts remained high at 84 per cent on average in the last three years,” it said.

Inflation is projected to remain subdued at about three per cent in 2014, reflecting both the absence of global inflationary pressure and the openness of the economies. However, in Qatar and the UAE, some price pressures could emerge, driven by a rapid increase in housing and related costs. The UAE is projected to see a rise in average inflation from 1.1 per cent to 2.8 per cent as the property market recovers and the deflationary impact from rent declines is reversed.

In a recent forecast, the International Monetary Fund had predicted GCC economic growth to be 4.4 per cent in 2014 as oil production rises and the non-oil sector benefits from the large infrastructure projects being implemented. However, because of the volatility inherent in oil prices, the IMF expects downside pressures during 2014, as well as longer-term structural challenges. The IMF has said that most GCC economies continue to have “substantial buffers” to cope with short-lived oil price shocks despite an expected drop in their current account surpluses.

The IMF also had noted that most GCC countries have accumulated large official external assets and would be able to comfortably weather temporary declines in oil income. Total public external assets in the GCC are estimated at nearly $2 trillion, which could be used to make up for any shortfall in oil revenue.

— issacjohn@khaleejtimes.com

Business - Net GCC foreign assets set to hit $2.3t at end-2014: IIF

$2.3 TRILLION!

 

[Halimi]

Saudi Arabia's growth is the quickest of any major economy with the exception of China, India and Indonesia.

 

[elszADaQ]

Saudi to produce first locally made car by 2017 - Cars & Boats - ArabianBusiness.com

 

[TeesraIndiotHunter]

Saudi to produce first locally made car by 2017 - Cars & Boats - ArabianBusiness.com

View attachment 36263

View attachment 36264

Seems alright. Too glossy and fancy though..but then again, what would you expect Saudis to come up with?

Here's what the REAL car of 21st century looks like

Tesla S-model.

Catch? Its an electric car!!!

@al-Hasani

Hey Hassani bro, when is GCC coming up with its own currency?

 

[elszADaQ]

Seems alright. Too glossy and fancy though..but then again, what would you expect Saudis to come up with?

Here's what the REAL car of 21st century looks like

Tesla S-model.

Catch? Its an electric car!!!

@al-Hasani

Hey Hassani bro, when is GCC coming up with its own currency?

It's a decent design. There will be three different ranging in price between $11,999 and $32,000.

 

[al-Hasani]

@TeesraIndiotHunter

Keeps getting delayed. I don't think that it will happen which is not necessarily a bad thing.

Game changer: King Abdullah Economic City
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By Ed Attwood​

Saturday, 7 June 2014 11:05 AM​

Fahd Al Rasheed has been running the King Abdullah Economic City megaproject for seven years.​

Two years ago, when Arabian Business first visited the King Abdullah Economic City (KAEC) project, based an hour north of Jeddah, a lone dredger was still bringing up hundreds of tonnes of sand from the sea bed in order to create the enormous deepwater manmade port. Fast forward to 2014, and the King Abdullah Port (KAP) boasts eight huge cranes, can serve two colossal container ships at the same time, and is the kingdom’s first privately funded and owned port.

It’s perhaps the most important milestone yet for one of the world’s most ambitious megaprojects. Announced in 2005, the KAEC masterplan involves building an entire city from scratch on a piece of land that is roughly the size of Washington DC, with investment in the project estimated to be as much as $100bn by the time it is fully completed.

For the man who runs King Abdullah Economic City, Fahd Al Rasheed, the port’s infrastructure, and its strategic location on the Red Sea, make it a game changer, both for the city, and for Saudi Arabia. “It’s a gift that keeps on giving in terms of demand, it’s unbelievable,” the chief executive says. “We already have capacity for 1.3 million containers in operation and we’re planning four million in the next two years and seven million by 2017.

“You’re talking about 24 percent of global trade going through the Red Sea, and this is a trend that’s never been addressed by a Red Sea port. We think King Abdullah Port is good for Saudi Arabia because it will lower logistics costs and increase our competitiveness across the board, while also changing the logistics map globally.”

Al Rasheed admits that it was a risk to build the port — which has had $665m worth of investment pumped into it so far — without guarantees from the big global shipping lines that they would serve the facility. Now, he says, shipping lines are “rewriting their networks” to include the port, which is arguably in a far more convenient location than Dubai’s Jebel Ali.

But the opening of King Abdullah Port is just part of the KAEC story. Encircling the port is the city’s Industrial Valley, while further afield are areas set aside for residential communities, tech clusters, universities, hospitals and so on. On the eastern side of the city will be its second major link to the outside world, the Haramain Station. When that is opened at the end of next year, the city will become one of four stops on Saudi Arabia’s latest high-speed rail network, linking the megaproject with Jeddah, Makkah and Madinah. Nearby is the King Abdullah University for Science and Technology (KAUST), while to the north lies the PetroRabigh petrochemicals plant — the largest of its type in the world.

There is much work to be done before that second link comes into play. KAEC already has some 70 companies now in the process of setting up bases onsite — including multinationals like Mars, Pfizer and Danone as well as local family giants such as Abdul Latif Jameel and the Naghi Group — and is now working hard to attract mid-sized firms, as well as companies not in the specific sectors it has targeted before. That’s in line with a similar push from the Saudi Arabian General Investment Authority (SAGIA), which provides licences for foreign companies in the kingdom, and which saw a new governor, Abdullatif Al Othman, take over two years ago.

“Certainly, with the new governor, there’s a lot more focus on certain sectors,” says Al Rasheed. “We’re very focused on life sciences, we’re very focused on fast moving consumer goods [FMCG], as well as plastics and logistics. We believe the Industrial Valley story is very strong — in fact we are developing more than half of it in the next two years.

“That’s 28 million square metres, and a tenfold increase in development on the industrial front. In fact, we already have companies committed for most of that land — it’s not that we’re developing on spec, we’re developing for demand.”

For smaller firms, KAEC has set up the Red Sea Forum, an event that will take place in New York in October, specifically to target American firms that haven’t expanded beyond their country’s shores. There, the city will be showcasing its incentives, which include ‘plug and play’ infrastructure, help from the local authorities in terms of setting up a business, cheap energy and labour costs, and even soft loans from the government to fund up to 50 percent of a company’s capital investment.

And the city is also looking to attract more tech firms as well; local telco Mobily is setting up a datacentre there, while flag-carrier Saudi Arabian Airlines is moving its full back office and IT department into KAEC.

“We’ve been focusing a lot on attracting organisations with substantial datacentres as part of our plans to add a hi-tech cluster to the city,” adds Al Rasheed. “I believe we have our industrial plans well defined, and we’re now focused more on attracting knowledge-based industries. Now we have the big IT companies as anchors, it makes it a lot easier for start ups to join as well.”

The megaproject is a rarity in Saudi Arabia, where the government is taking advantage of a high oil price to increase direct spending on infrastructure. But KAEC is based on a public private partnership model, meaning that it has relied on private-sector investment – even during the recent economic crisis. Altogether, Emaar Economic City (EEC), the consortium that is building KAEC, and which is listed on the Saudi stock market, has raised $4bn in capital, with a further $10bn raised from other investors and from land sales in the 181-square-kilometre development. Having broken even in 2011, EEC reported $73m in profits during 2013.

Instead, the government’s backing comes in the form of the general act for the economic cities, which established the Economic Cities Authority (ECA), the regulator. The ECA has been instrumental in ensuring that KAEC offers a different value proposition from competing locations in Saudi Arabia and across the Gulf. Both individuals and companies have been offered 100 percent foreign ownership, and a bonded zone allows for the customs-free movement of goods. In addition, government services in the city are offered on a 24/7 round-the-clock basis.

In building an entire city from scratch, Al Rasheed and his team have faced something of a conundrum; do you build the city first, and wait for the demand to arrive, or do you hold on for the interest and then build afterwards?

The answer is that neither approach is perfect. What KAEC has tried to do in the Industrial Valley is put all the infrastructure — the roads, electricity, sewerage and so on – in place, so that companies can get a headstart on their operations when they sign up. For housing, it’s a much trickier task of building homes in chunks in a bid to match demand.

“For the longest time, these projects were hard because this is not a satellite city, it’s not building off demand from an existing city,” Al Rasheed says. “We are one hour away from Jeddah, which is enough of a distance to make commuting impossible. So people had to choose — and we struggled with demand for real estate for the longest time.

“But then we reoriented ourselves towards building that demand, creating that support and it’s completely shifted. Now we have captive demand — all our apartments are full and we have waiting lists for hundreds of people, literally.”

The chief executive points out that each of the 70 corporates moving into the city will each bring between 100-500 personnel each, and the waiting list for individual apartments has now stretched to 500 names.

“The demand is now outpacing supply,” Al Rasheed adds. “That’s why we’re building 5,000 units right now, which honestly, in my opinion, will not be enough. We will have to easily go to 12,000 units in three years – and that is an understatement.”

Of course, housing is not just an issue for the city, it’s a critical concern for Saudi Arabia as well. As values have shot up, more and more Saudis have found themselves unable to buy a new home, while plans from a newly launched Housing Ministry to build hundreds of thousands more homes have been slow to get off the ground. Affordable housing — a topic that is often discussed but rarely implemented in the GCC — will be of huge importance to the city.

Al Rasheed says that KAEC will provide housing for every wage bracket — from labour to luxury — and that affordable housing will be launched in two months time. However, he also admits that construction costs and affordability are the biggest challenge the city faces right now, and may well result in some dents in the balance sheet.

“If you’re trying to address 100 percent of the market, only 15 percent of that is high end,” he says. “The rest of the 85 percent is acutely price sensitive, so if there are any changes in the costs by, say, 10 percent, the proposition doesn’t work.

“The problem with affordable housing is that it has to be affordable or you can’t build it, there is no other way. Our product will offer good-sized homes, but also be environmentally sustainable.

"We won’t hit on all segments, but this is the minimum of what ‘affordable’ should be, even if it creates margin constraints.”

Alongside the homes comes social infrastructure. The city’s first school, The World Academy (run by Dubai’s GEMS), is now in its second academic year and hosts 250 students, with capacity for 600. Again, demand is such that the school is being expanded to a capacity of 1,100, while the chief executive says that two other middle schools are being planned. KAEC is also negotiating with the government to build another three public schools. There is one clinic onsite, with a polyclinic being built, and Al Rasheed says that the city is in talks with the authorities over a public private partnership proposal for a new hospital.

KAEC’s first hotel, Bay La Sun Hotel & Marina, has been open for seven months, with a further eight to ten hotels in the works. In addition, a golf course, activities park and sports complex will all be completed by the end of next year. A look at the contracts section on the KAEC website gives some indication as to the scale of work that is currently ongoing, with 100 contracts awarded in 2013, and seven so far this year. A bit further down the line is a destination mall, which will be built near the Haramain Station part of the city.

“We want it to be very family oriented, very entertainment oriented, and to offer brands that are not available elsewhere,” Al Rasheed says of the mall. “We want it to be an experience, and worth using the high-speed rail for 30 minutes to get to.

“We’re doing lots of planning on what that means and how it will be interesting in a Saudi context, but we think it’s a no brainer and we are going to put our money behind it, as we did with the port.”

The mall links in with a central plank of KAEC’s future strategy — tourism. As Saudi Arabia increases the number of pilgrims who will visit the country for hajj and umrah from 10 million to 20 million, the city’s location on a high-speed rail link between the two holy cities has the potential to provide it with an impressive number of visitors from a standing start. Al Rasheed says tourism is “our biggest way forward today” and is targeting weekend and holiday travelers from inside Saudi Arabia, as well as business tourists via exhibitions, events, forums and the like.

And as more Saudis visit the city, the hope is that some will take jobs and stay there. Al Rasheed says that KAEC has now created 17,000 jobs and is targeting 27,000 jobs on the ground by 2020. Frankly, he seems remarkably relaxed about the pressure to deliver. Then again, the results so far have been pretty impressive.

“It’s fun — every day there’s something new, it fuels you,” he says. “This is my seventh year, and it’s amazing — I’m working harder than ever.”

Game changer: King Abdullah Economic City - Politics & Economics - ArabianBusiness.com

Excellent interview.

See more below:

KAEC to have 2m people, projects worth $100bn on completion: CEO​

 

[al-Hasani]

Maaden signs SR18.9bn financing deal for key phosphate project

MAJOR PACT: The financing facilities will be utilized to fund the phosphate project, which is being built at in Waad Al-Shamal and the Ras Al-Khair Industrial City.​

JEDDAH: ARAB NEWS
Published — Wednesday 2 July 2014


JEDDAH: Saudi Arabian Mining Co. (Maaden) has signed a financing deal worth SR18.9 billion ($5 billion) with commercial banks and the Public Investment Fund to back its SR28 billion ($7.5 billion) phosphate production project in the Kingdom.
The project in the northern city of Waad Al-Shamal is a joint venture between Maaden, Saudi Basic Industries Corp. and Mosaic and is part of the Kingdom’s efforts to create a stronger industrial base beyond oil refining and export. Phosphate is commonly used in fertilizers.

Maaden said in a statement that the new complex would create significant value to shareholders.
A total of 16 local and international commercial banks, including Al-Rajhi Bank , Bank of Tokyo-Mitsubishi and BNP Paribas, as well as three export credit agencies and the Public Investment Fund (PIF) signed the financing agreement.
The loan agreement will last for 16.5 years and repayments will be made on a semi-annual basis from Dec. 31, 2018.
The scheme will have a production capacity of 16 million tons per year of phosphate concentrate, sulphuric acid, phosphoric acid, as well as plants to produce calcium monophosphate and calcium diphosphate, Ma’aden said previously, with phosphate production expected to start in late 2016.

The rest of the funding is expected to come in the form of equity loans from the project sponsors.
Maaden said in May it planned rights issue for SR5.6 billion ($1.5 billion) to support its expansion plans, although it didn’t specify how much would be used to fund the phosphate scheme.
HSBC is advising on the rights issue, as it did on the wider project financing.
Khalid Al-Rowais, Maaden VP for finance, said: “These financing facilities represent another milestone in the growth of Maaden and take the total fund raising by Maaden to almost SR75 billion since 2008.”
He said: “Commitments received from financial institutions were considerably in excess of the funds required, which is a testament both to the quality of the project itself and to the successful track record that Maaden has established in the financing market.”

The financing signed on Tuesday includes an SR7.5 billion financing facility provided by the Public Investment Fund, SR7 billion of financing facilities provided by Al-Rajhi Banking & Investment Corporation, Alinma Bank, Arab Petroleum Investment Corporation (APICORP), Banque Saudi Fransi, BNP Paribas, Export Development Canada, Islamic Development Bank, Riyad Bank, Samba Financial Group, Sumitomo Mitsui Banking Corporation, The National Commercial Bank, The Saudi British Bank and the Saudi Investment Bank. A further SR2.3 billion loan facility was signed by The Export-Import Bank of Korea (KEXIM).
In addition, KEXIM and Korea Trade Insurance Corporation (K-sure) provided loan insurance and guarantee facilities of SR2.2 billion ($575 Million) in respect of loan facilities being provided by HSBC Bank Middle East Limited, KfW IPEX-Bank GmbH, Mizuho Bank, Ltd., Sumitomo Mitsui Banking Corporation, and the Bank of Tokyo Mitsubishi UFJ, Ltd.
Maaden announced that its affiliate Maaden Waad Al-Shamal Phosphate Company (MWSPC) signed financing facilities for long-term project finance loans with a consortium of 20 financial institutions for a total amount of SR18.9 billion.
MWSPC is a joint venture company formed by Maaden to develop the project with The Mosaic Company and the Saudi Basic Industries Corporation (SABIC).
Maaden, Mosaic and SABIC own 60 percent, 25 percent and 15 percent of the project respectively.

The financial institutions include the Public Investment Fund, financial institutions from both inside and outside of Saudi Arabia as well as the two Korean export credit agencies who have participated in the financing in support of Korean contractors participating in the construction of the project.
Funding has also been obtained from the Islamic Development Bank.
The financing facilities will be utilized to fund the development of MWSPC’s phosphate project which is being constructed at sites in Waad Al-Shamal and the existing Ras Al-Khair Industrial City.
As one of the largest and integrated phosphate fertilizer facilities in the world, it will double Maadens cost effective phosphate production and improve Maaden’s access to key global markets.
The estimated cost of the project is around SR28 billion, and production at the new facility is expected to commence in late 2016.

MWSPC will be a fully integrated, world-class phosphate production facility in Saudi Arabia, a JV of Saudi Arabian Mining Company (Maaden), The Mosaic Company and the Saudi Basic Industries Corporation (SABIC).
Maaden, Mosaic and SABIC will own 60 percent, 25 percent and 15 percent of the company respectively.

Maaden signs SR18.9bn financing deal for key phosphate project | Arab News — Saudi Arabia News, Middle East News, Opinion, Economy and more.

 

[al-Hasani]

Why is it despite swimming in money, whenever one of the Saudi royals gets a bit ill - they fly off to America for treatment?

Wouldn't it be wiser instead of spending money on gold plated everything - to get the very basics right first of all?

KSA has a good healthcare system being a welfare state but if you are billionaire you choose the best like any other person in the world in that position. Which in this case means private American hospitals. World leaders and people that can afford it from the entire world do that.

Quit trolling this informative thread.

Please delete his troll post that has nothing to do with the topic and is an attempt of trolling.

@WebMaster @Aeronaut @Manticore @Emmie @Jungibaaz @Oscar

My 200 times banned Moroccan cousin is unfortunately trolling again so deal with it.

Thanks.

 

[al-Hasani]

@IronBeam

You know that our region was the leading region for milleniums together with China and the leading not long ago during the Islamic Golden Age that lasted 500 years. For the past 500 years or so the non-Western world has been a backwater compared to the West. Thus there is a lot of work. This includes KSA. It means industralization and focus on science and education which is a work in progress.

Comparing KSA with USA is unfair on all fronts for obvious reasons.

Besides speaking about the US then Saudi Arabian students form the 4th biggest number of foreign students after Chinese, Indians and South Koreans. All countries with much bigger populations. Per capita we have the most. Of course they will help and not all will return but it's a good step. Same with building numerous new advanced universities that have attracted people from the West and East as teachers and students.

More Saudi Arabians studying in the U.S
​

The number of Saudi students in the U.S. last year grew to 44,566, a nearly 30% increase from 2011, largely fueled by a new scholarship program that encourages them to study abroad.

November 24, 2013|
By Jason Song

Noura Islam, a sophomore at UC Irvine from Saudi Arabia, chose the school for its engineering program and because “I’m a beach person,” she says. The number of Saudi students at UC Irvine has almost tripled since 2010, going from eight to 23 this year. (Spencer Bakalar, Los Angeles Times)​

At first glance, the Facebook photo doesn't look like a USC alumni gathering: No cardinal and gold in sight, not a single Tommy Trojan to be found.

But, on closer inspection, it's apparent that half of the smiling men are flashing the Trojan "victory" sign.

"At USC, you quickly develop a sense of pride being a top university," said Bahjat Zayed, the past president of the 120-member USC Alumni Club of Arabia, one of the university's fastest growing graduate groups.

The club is one sign of the rapid rise of Saudi Arabians studying in the United States. Those numbers fell dramatically after the Sept. 11 attacks; the number of Saudi students dropped by almost a quarter in 2002 and continued to fall for the next two years.

But the numbers have grown steadily since 2005 and doubled from the 2010 to 2012 academic years, according to a recent survey. The number of Saudi students in the U.S. last year grew to 44,566 — a nearly 30% increase from 2011.

The country ranked behind only China, India and South Korea in the number of students studying in U.S. colleges and universities.

Experts say the change is largely fueled by a new Saudi Arabian scholarship program that encourages students to study abroad. Other countries have adopted similar programs. Of the four nations that made the biggest percentage gains in the recent survey, Kuwait and Brazil also offered government-sponsored scholarship programs.

"Countries that are trying to leap from their population into a 21st century economy need to do that very rapidly and they don't have the capacity in their own universities," said Peggy Blumenthal, senior counselor to the president of the Institute of International Education, which conducted the recent survey in partnership with the U.S. State Department.

When King Abdullah assumed the Saudi Arabian crown in 2005, he began to emphasize science education and foreign travel as a way to modernize the country. The scholarship program offers qualified students free tuition, travel funding and expenses, according to media reports and students, and has made it possible for middle-class students to go abroad.

Traditionally, only children from wealthy Saudi families moved out of the country for college. Osama bin Laden's father, a billionaire construction magnate, sent more than a quarter of his 54 children to study in America and other foreign countries, according to "The Bin Ladens," a history of the family.

The government requires females to be accompanied by a male relative, although many students say that compliance is not strictly enforced.

Officials with the Saudi Arabian Cultural Ministry, which oversees the scholarship program in the United States, did not return calls for comment.

Several Saudi students studying in the U.S. said it would have been difficult for them to do so without the financial assistance.

Public U.S. colleges prize foreign students, especially during tough economic times, because they pay more in tuition than American citizens.

Reem Alattas grew up in western Saudi Arabia and enjoyed studying cognitive science, which examines brain processes, but knew that no colleges in Saudi Arabia offered programs in it.

The daughter of an aviation engineer, Alattas thought it would be difficult for her family to afford to send her overseas to study and she assumed she would stay in Saudi Arabia.

But she heard of other students who had received financial aid to study abroad. Her parents, who had studied in the United States during college, encouraged her to apply.

She received a scholarship but did not apply to U.S. schools right away. Like many of her classmates, Alattas went to a college prep program at Virginia Tech for a year after high school. She lived in an apartment with other Saudi students while improving her English and also took the SAT and other college admissions tests.

Alattas decided to go to UC Berkeley, where she is now a sophomore and intends on majoring in cognitive science. "I like that it's very diverse and multicultural and that people are not afraid to identify themselves," Alattas said. "It's a very intellectual place."

One of Alattas' Virginia Tech classmates, Noura Islam, chose UC Irvine for its engineering program and because "I'm a beach person," she said.

The number of Saudi students at Irvine has almost tripled since 2010, going from eight to 23 this year.

By comparison, there were 172 Saudi Arabians last fall at USC, almost five times more than in 2007.

Islam said the transition has been relatively seamless, although figuring out how to get around in Orange County has been difficult, especially since she doesn't drive.

Women are not allowed to get behind the wheel in Saudi Arabia.

"Back at home, I'm used to getting a driver," she said. "Here, you have to [do] everything on your own."

More Saudi Arabians studying in the U.S. - Los Angeles Times​

If you want to troll then do it in another thread as I tried to keep this thread troll free. But since you hate Arabs and want us dead this is not possible for you unfortunately.

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[al-Hasani]

King Abdullah, Hadi discuss regional developments

Custodian of the Two Holy Mosques King Abdullah holds talks with Yemeni President Abd Rabbu Mansour Hadi in Jeddah on Tuesday. (SPA)

Crown Prince Salman receives Yemeni President Abd Rabbu Mansour Hadi at Jeddah airport. (SPA)​

Custodian of the Two Holy Mosques King Abdullah held talks Tuesday with Yemeni President Abd Rabbu Mansour Hadi at his palace in Jeddah. The two leaders discussed major regional and international developments and ways of expanding bilateral cooperation.
Crown Prince Salman, deputy premier and minister of defense, Deputy Crown Prince Muqrin, Intelligence chief Prince Khaled bin Bandar and National Guard Minister Prince Miteb bin Abdullah attended the talks.
Earlier on arrival at King Abdulaziz International Airport in Jeddah, Hadi was received by Prince Salman and other senior officials.

King Abdullah, Hadi discuss regional developments | Arab News — Saudi Arabia News, Middle East News, Opinion, Economy and more.


​

Strong domestic demand spurs Saudi Arabian private sector
​

JEDDAH: ARAB NEWS

Published — Wednesday 9 July 2014

Last update 9 July 2014 2:09 am

The Saudi private sector is expected to maintain the current level of growth supported by strong domestic demand, rising bank lending and public sector investment, according to top economic researchers.
The contribution of government services to overall economic growth is likely to decline due to larger base effect in the next quarter before picking up again toward the end of the year, says a report from Jadwa Investment.
In real terms, the Saudi economy was 4.7 percent larger in the first quarter of 2014 than in the same quarter of 2013.
Growth was unchanged compared to the previous quarter and was more dependent on the oil sector.
“We assume that year-on-year economic growth will ease further in the second quarter owing to seasonal factors and lower annual growth in oil production,” said the Jadwa Investment report.
It said the Central Department of Statistics and Information (CDSI) has released GDP data for the first quarter this year showing an improvement in real economic growth to 4.7 percent year-on-year compared with 3.8 percent in the first quarter of 2013.
Growth was unchanged compared to the previous quarter and was more dependent on the oil sector as structural changes in the labor market continued to affect the non-oil economy.
The contribution of the oil sector improved to 1.1 percentage point of the overall economic growth in the first quarter, the largest in almost two years.
The nonoil sector, however, recorded its slowest annual growth since such data was published in 2010, though it still remains robust at 4.4 percent year-on-year.
The deceleration was mainly due to a moderation in the non-oil private sector which also recorded its slowest quarterly growth for which data is available.
The slower growth was observed in the construction, wholesale and retail trade and transport, storage and communication subsectors.
The oil sector grew by 5.8 percent, the highest quarterly reading in almost two years. Oil production is the central driver of the performance of the oil sector. Oil output rose by 6 percent over the same period to 9.7 million barrel per day.
“Looking forward, we think the contribution of the oil sector to the overall economic growth is likely to shrink slightly as the large base effects of the summer months starts to affect annual growth,” said the report.
Nonoil GDP growth expanded by 4.4 percent year-on-year compared with 4.8 percent in the previous quarter and 6 percent in the same period last year.
Within the nonoil sector, the government sector expanded by 4.1 percent year-on-year, almost double its growth in the previous two quarters.
Most of this growth was sourced from higher government services which expanded by 3.5 percent year-on-year during the same period.
The contribution of government services to overall economic growth is likely to decline due to larger base effect in the next quarter before picking up again toward the end of the year.
“We still maintain our view that labor market reform and enforcement of labor law will maintain an elevated demand for government services,” said the Jadwa report.
At annual growth rate of 4.4 percent, the nonoil private sector remained the main contributor to overall economic growth, despite the decline in growth from 5.7 percent in the previous quarter and 5.9 percent in the same period last year.
“According to official data, we calculate that the sector contributed 57.8 percent of the annual growth in the first quarter of this year. Despite slower growth, we expect the private sector to maintain the current level of growth supported by strong domestic demand, rising bank lending and public sector investment,” said the report.
While all sectors registered a positive year-on-year growth in the first quarter, their performance varies.
Manufacturing was the fastest growing private sector in the first quarter, rising by 6.5 percent, driven by a 6.3 percent increase in non-refining manufacturing.
In real terms, the latter accounts for 88 percent of the manufacturing sector and its growth rate is heavily influenced by the production of petrochemicals, plastics and related products and greater output of construction materials.
Crude petroleum and natural gas manufacturing expanded by 7.8 percent, which is heavily influenced by the oil sector.
“We expect the contribution of the petroleum refining to overall economic growth to gradually increase as the country expands its refining capacity over the next few years,” said the report.
As expected, year-on-year growth in construction and wholesale and retail trade and transport and communication all dropped to their lowest levels in two years.
In all cases, however, growth was still robust, at 5.6 percent, 3.8 percent and 6 percent respectively.
While the slower growth can be attributed to structural changes in the labor market, the robust growth is a direct result of the massive resources and investments that are active in each of these sectors.
“We maintain our view that while the growth in these three sectors is likely to gradually slowdown over the coming quarters, they will still remain among the fastest growing sectors in the Kingdom,” said the Jadwa report.
The construction sector will remain the prime beneficiary of massive investments in building infrastructure, commercial and increasingly residential projects. The retail sector is likely to maintain a robust growth over the coming quarters as indicated by the solid domestic consumption demand.
Transport growth stems from the need to move a high volume of goods around the Kingdom (both imports and construction materials).
In quarter-on-quarter terms, the economy expanded by 3.7 percent compared with 1.6 percent in the previous quarter.
Most of this growth was generated by the non-oil private sector which expanded by 11 percent, while both the oil and government sectors shrunk by 1.1 percent and 10 percent respectively.
Three sectors recorded large quarterly drops in output in the first quarter.
The first was utilities (down by 17.9 percent quarter-on-quarter), which reflects the drop in residential and commercial power demand due to much lower use of air conditioning.
The second was government services (down by 15.4 percent quarter-on-quarter) reflecting a seasonal trend.
The third was the oil sector (down by 1.1 percent quarter-on-quarter) as oil production fell compared to the last three months of last year.
For most other sectors of the economy, quarterly output recorded double digit growth, again due to seasonal factor, the impact of Eid Al-Adha, which in recent years has fallen in the fourth quarter.
“We expect the year-on-year economic growth will ease further in the second quarter, said the Jadwa researchers.
In addition to much lower growth in oil production (1.5 percent year-on-year in the second quarter), the new norm for the domestic labor market will maintain its negative impact on annual growth of the next two quarters.
“Nonetheless, we expect both government and private sectors to maintain their solid performance which will maintain a healthy economic performance,” said the report.
Year-on-year growth in bank lending remained at double digit for almost two consecutive years and business surveys point to an expanding private sector.
With solid local fundamentals, but considerable uncertainty over regional instability, we maintain our forecast for total real GDP growth for 2014 at 3.8 percent with risks tilted toward the upside if oil production remains elevated for the rest of the year.

Strong domestic demand spurs Saudi private sector | Arab News — Saudi Arabia News, Middle East News, Opinion, Economy and more.​