Latest news with #SafaaElTayebElKogali
Argaam
4 days ago
- Business
- Argaam
Saudi non-oil sector resilient amid challenges: World Bank
Safaa El Tayeb El-Kogali, the World Bank's Country Director for the GCC Countries, said that the outlook for Saudi Arabia's economy in 2025 is broadly positive, with growth projected at 2.8%, gradually strengthening to 4.6% by 2027. This anticipated increase is expected to be supported by the phase out of OPEC+ production cuts, which will benefit the oil sector, alongside continued strength in non-oil activities, she added, in an interview with Argaam. The performance of Saudi Arabia's non-oil sector in 2024 stands out as a key highlight. While the oil sector faced headwinds from global production dynamics, the non-oil economy maintained strong growth at 4.3%. This resilience reflects the progress made in diversifying the economic base and enhancing the role of services and domestic consumption, said El-Kogali. She added that the non-oil sector will likely remain a key driver of growth, buoyed by government initiatives to enhance infrastructure, attract investment, and promote private sector development. She also indicated that the fiscal deficit widened in 2024, partly due to sustained public expenditure and fluctuating oil revenues, noting that, nonetheless, inflation remained low and stable, helping to maintain consumer purchasing power and macroeconomic stability. According to El-Kogali, the private sector is expected to become the main engine of sustainable growth in Saudi Arabia. To enable this, the government plays a critical role in creating the right conditions—through investment in infrastructure, human capital, and institutional reforms. The World Bank findings indicate that government consumption spending has a positive but relatively modest effect on non-hydrocarbon output, with fiscal multipliers ranging between 0.1 and 0.45 across GCC countries. These fiscal multipliers tend to be higher during economic downturns, highlighting the role of government spending as a stabilizing force when growth slows, said the top official. On the other hand, government investment spending shows a smaller immediate impact, with a marginal increase in potential output estimated at around 0.07% for each one-percentage-point rise in investment, which is in line with literature, she added. However, El-Kogali warned that Saudi Arabia faces both short-term and long-term challenges to sustaining growth, saying that, in the short term, global trade and economic uncertainty, fluctuating oil prices and production levels, and the potential spillovers from regional conflicts pose key risks to stability and growth momentum. Meanwhile, over the longer term, structural vulnerabilities remain, mainly the continued dependence on hydrocarbon revenues, and the persistent decline in productivity, which poses a challenge to competitiveness and economic diversification. Addressing these issues through targeted reforms, innovation, and skills development will be essential to achieving the Kingdom's long-term growth objectives, she added.
Khaleej Times
25-06-2025
- Business
- Khaleej Times
UAE to remain among strongest performers in the GCC : World Bank
The World Bank has warned that escalating tensions between Iran and Israel pose a serious threat to economic stability across the GCC region, potentially derailing growth prospects and intensifying global uncertainty. While the immediate economic impact of the conflict remains difficult to quantify, the bank cautions that the fallout could ripple far beyond energy markets, affecting trade, inflation, investor sentiment, and fiscal stability. Safaa El Tayeb El-Kogali, the World Bank's regional director for the GCC, highlighted the risks during the release of the Bank's latest Gulf Economic Update. She noted that the region remains particularly vulnerable to geopolitical shocks, given its centrality to global oil markets and shipping routes. 'Any conflict, especially in this region, can have long-lasting and adverse effects,' she said, pointing to rising shipping costs, increased inflationary pressures, and mounting investor caution as potential consequences. 'The conflict between Iran and Israel is injecting a new layer of uncertainty into the global economy,' said El-Kogali. 'In such volatile conditions, investors tend to adopt a wait-and-see approach, delaying decisions until clarity and stability return.' Even as the region braces for potential external shocks, the World Bank acknowledged the GCC's economic resilience, largely credited to sustained diversification efforts. In 2024, the region's overall GDP grew by 1.8 per cent, a notable improvement from 0.3 per cent in 2023. This recovery was driven by a robust 3.7 per cent expansion in non-oil sectors, which helped offset a 3 per cent contraction in oil output due to Opec+ production cuts. Looking ahead, the Bank projects regional growth will rebound to 3.2 per cent in 2025 and accelerate to 4.5 per cent by 2026, supported by the gradual easing of oil production curbs and continued momentum in non-oil industries. The UAE is forecast to be among the strongest performers, with growth reaching 4.6 per cent in 2025 and stabilising at 4.9 per cent through 2027. This is expected to be fuelled by targeted public investments, improvements in governance, and expanding international partnerships, along with the normalisation of oil production levels. However, the outlook remains highly contingent on geopolitical developments and the broader global economic environment. 'Global trade uncertainty, weaker demand from key trading partners, and sustained volatility in oil markets could undermine growth projections,' El-Kogali warned. She urged policymakers to accelerate structural reforms, deepen intra-regional trade, and reduce dependency on hydrocarbons to build greater economic resilience. The World Bank's report, Smart Spending, Stronger Outcomes: Fiscal Policy for a Thriving GCC, stresses the need for smarter fiscal management amid persistent oil price fluctuations and growing expenditure pressures. Some Gulf economies are projected to face widening fiscal deficits in 2025, highlighting the urgency of reforming government finances. The report finds that fiscal policy has played a stabilising role during economic downturns, with a one-unit increase in public spending boosting non-oil GDP by up to 0.45 units. Nonetheless, the impact of public investment on long-term productivity and potential output remains limited. The Bank estimates that a one-time increase of one percentage point in government investment yields only a 0.07 per cent rise in non-oil potential output, indicating a need to reassess how fiscal resources are allocated. To address short- and long-term risks, El-Kogali recommended a multi-pronged approach involving fiscal diversification, tax reform, and stronger regional trade integration. 'Sustaining growth will depend on our ability to reduce exposure to fossil fuels, create high-quality jobs for youth, and stimulate innovation and entrepreneurship,' she said. She also pointed to the need for inclusive growth policies that support domestic consumption, bolster exports, and attract stable investment. With the spectre of conflict looming large and global economic headwinds gathering, the World Bank's message to GCC economies is clear: the time to fast-track reform is now, before volatility undermines years of hard-won progress.
