Latest news with #nonOilSector


Arab News
3 days ago
- Business
- Arab News
Oman's GDP grows 4.7% as non-oil sectors expand
RIYADH: Oman's gross domestic product at current prices grew by 4.7 percent year on year in the first quarter of 2025, reaching 10.53 billion Omani rials ($27.3 billion), compared with 10.06 billion rials during the same period in 2024. Preliminary data released by Oman's National Centre for Statistics and Information attributed the increase primarily to stronger performance in non-oil activities, which grew 4.1 percent to 7.13 billion rials compared to 6.85 billion rials a year earlier. Across economic sectors, agriculture and fisheries posted the highest growth rate, expanding 11.1 percent to 326.6 million rials. Industrial activities rose 2.8 percent to 1.97 billion rials, while services activities grew 4.2 percent with a total contribution of 4.84 billion rials to GDP. Oil activities also contributed to the overall expansion, recording a 6.8 percent increase in value-added, reaching 3.71 billion rials by the end of the first quarter of 2025, up from 3.47 billion rials in the same period of 2024. While crude oil activities declined 7.5 percent to 2.74 billion rials, natural gas activities saw a marked increase of 89 percent, with value-added rising to 970.8 million rials. This performance comes as Oman continues to strengthen non-oil sectors and diversify its economy. Earlier in June, Credit Oman reported that insured non-oil exports reached 61.2 million rials in the first quarter, a 6 percent increase from the same period last year, driven by higher shipments of construction materials, petrochemicals, mining products, and agricultural goods. Overall, the sultanate's broader non-oil exports rose 8.6 percent to 1.61 billion rials, accounting for 28.6 percent of total exports. The government is also pursuing fiscal reforms to support long-term growth. Under a royal decree, Oman will become the first Gulf country to introduce personal income tax, imposing a 5 percent levy on taxable income exceeding 42,000 rials per year starting in 2028. The measure is expected to apply to about 1 percent of the population. Earlier in June, the country's residential property market was reported to have shown renewed strength. Official data from Oman's National Centre for Statistics and Information indicated that residential property prices rose 7.3 percent year over year in the first quarter, led by a 6.5 percent increase in residential land values, which form the largest component of the real estate index. Apartment prices rose 17 percent in May, while villas gained 6.4 percent, and other residential units increased 2.2 percent. The overall residential real estate price index advanced 5.5 percent quarter over quarter. The gains reflect a broader regional upswing in property activity during early 2025.


Asharq Al-Awsat
6 days ago
- Business
- Asharq Al-Awsat
IMF: Saudi Economy Shows Resilience Amid Global Shocks
The International Monetary Fund (IMF) has confirmed that Saudi Arabia's economy has demonstrated remarkable resilience in the face of global disruptions, with non-oil activities continuing to expand and inflation remaining contained. The IMF also noted a historic decline in unemployment rates, underscoring the strength of the Kingdom's economic fundamentals. In a statement concluding its Article IV mission to Saudi Arabia - a review welcomed by the Ministry of Finance - the Fund noted that despite the challenges posed by lower oil revenues and higher investment-related imports, which resulted in a dual deficit, the country still maintains significant external and fiscal buffers. The Fund added that the current fiscal expansion beyond the budgeted plans remains appropriate, supporting growth in non-oil sectors. According to the IMF, non-oil real GDP grew by 4.2 percent in 2024, driven mainly by robust private consumption and rising non-oil investments. Although oil production decreased to 9 million barrels per day, the overall economy expanded by 1.8 percent last year. Preliminary estimates for the first quarter of 2025 indicate non-oil GDP accelerated further, rising 4.9 percent year-on-year. Previously, the IMF had projected Saudi Arabia's total GDP growth at 1.5 percent for 2024. Higher-than-planned spending widened the fiscal deficit to 2.5 percent of GDP in 2024, surpassing initial targets. Still, the non-oil primary balance improved modestly, narrowing by 0.6 percentage points. Central government debt rose to 26.2 percent of GDP. However, the Kingdom remains among the least indebted countries globally, with net debt below 17 percent. The Fund expects domestic demand, including large-scale government projects, to continue as the main growth engine, even as global uncertainties mount and commodity price forecasts soften. For 2025, non-oil real GDP is projected to grow by 3.4 percent, supported by Vision 2030 initiatives and strong credit expansion. Over the medium term, the Fund anticipates non-oil growth will rise to about 4 percent by 2027, then gradually moderate to 3.5 percent by 2030. The Kingdom's hosting of major international events is expected to sustain this momentum. On trade risks, the IMF noted that the direct impact of global trade tensions should remain limited. Oil products, which accounted for 78 percent of Saudi exports to the United States in 2024, are exempt from US tariffs, while non-oil exports to the American market represent only 3.4 percent of the Kingdom's total non-oil shipments. Inflation is expected to remain contained around 2 percent, thanks to the riyal's peg to the US dollar and the credibility of Saudi monetary policy. Externally, the current account deficit is projected to widen, peaking near 3.9 percent of GDP by 2027, before easing to 3.4 percent in 2030. This increase largely reflects higher imports linked to investment projects and greater remittances. Nonetheless, Saudi Arabia's international reserves are anticipated to stay robust. The Fund warned that weaker oil demand, intensifying trade frictions, or deeper geoeconomic fragmentation could weigh on oil revenues. Such shocks could widen fiscal deficits, raise debt, and increase borrowing costs. However, higher oil prices or accelerated reform implementation could yield stronger growth. On fiscal policy, the IMF judged the current expansionary approach appropriate, estimating the overall fiscal deficit will rise to 4.3 percent of GDP in 2025. This figure masks improvements in the non-oil primary balance, which is projected to strengthen by 3.6 percentage points relative to non-oil GDP. Over the medium term, the fiscal deficit is expected to decline gradually, falling to about 3.3 percent of GDP by 2030. This adjustment would be driven by efforts to contain the public wage bill and improve spending efficiency. During this period, the non-oil primary deficit should narrow by around 4.2 percent of non-oil GDP. The Fund anticipates that these deficits will be financed primarily through borrowing, including debt issuance and bank loans, with public debt rising to about 42 percent of GDP by the end of the decade. To ensure intergenerational fairness and fiscal sustainability, the IMF emphasized the importance of gradually tightening fiscal policy over the medium term. It recommended raising additional non-oil revenue equivalent to about 3.3 percent of non-oil GDP between 2026 and 2030. The Fund welcomed government plans to increase taxes on undeveloped land and broaden the value-added tax base, alongside recent adjustments in energy prices. It also urged authorities to accelerate the phase-out of energy subsidies, including removing the gasoline price cap. Additionally, the IMF supported ongoing reviews of public spending to deliver savings and improve efficiency, with an emphasis on reducing low-impact recurrent expenditure. Turning to monetary policy and the banking sector, the IMF reaffirmed that the currency peg to the US dollar remains appropriate, underpinned by large foreign reserves and high credibility. The Saudi Central Bank is expected to keep its policy rate aligned with the US Federal Reserve. The Fund welcomed the Central Bank's efforts to review prudential tools to contain risks from rapid credit expansion and called for continued vigilance to preserve financial stability. It also praised regulatory reforms, including the new banking law and the development of a risk-based supervisory framework. Finally, the IMF underscored the critical role of structural reforms in sustaining non-oil growth and diversifying the economy. It noted that Saudi Arabia has implemented wide-ranging changes in corporate regulation, governance, labor markets, and the financial sector. New measures, such as the updated investment law and labor law amendments, are expected to boost investor confidence and productivity. The Fund encouraged further efforts to strengthen human capital, enhance access to finance, and advance digital transformation, including integrating artificial intelligence into public services.


Arab News
6 days ago
- Business
- Arab News
IMF raises Saudi growth forecast to 3.5% for 2025, outstripping global average
RIYADH: The International Monetary Fund has revised up its forecast for Saudi Arabia's economic growth in 2025, raising it to 3.5 percent from the 3 percent projected in April. In its concluding statement following an Article IV consultation, the IMF highlighted the pivotal role of Vision 2030 mega projects in sustaining the Kingdom's economic momentum, noting its continued resilience amid lower oil prices and shifting international challenges. The IMF projects Saudi economic growth will outpace the global average of 2.8 percent in 2025, as well as outstripping most of its Gulf peers. 'Robust domestic demand — including from government-led projects — will continue to drive growth despite heightened global uncertainty and a weakened commodity price outlook,' the IMF stated in its new report. The fund expected this momentum, supported by the scheduled phase-out of OPEC+ production cuts, to push growth even higher to 3.9 percent in 2026 before stabilizing around 3.3 percent in the medium term. The Saudi Ministry of Finance welcomed the IMF's concluding statement, highlighting its confirmation of 'the strong resilience of the Saudi economy in the face of global economic shocks, supported by the expansion of non-oil sector activities, containment of inflation, and a historically low unemployment rate — all aligning with the objectives of Saudi Vision 2030.' The ministry noted the IMF's praise for the government's efforts to enhance public finance sustainability and resilience to shocks, as well as its recognition that strong domestic demand continues to support economic growth despite global uncertainty, reflecting the Kingdom's continued implementation of Vision 2030 projects. Non-oil gross domestic product growth, a key indicator of diversification success, is projected to grow at 3.4 percent in 2025. While slightly lower than the 4.2 percent achieved in 2024, the IMF attributed this sustained performance to 'continued implementation of Vision 2030 projects through public and private investment, as well as strong credit growth, which would help sustain domestic demand and mitigate the impact of lower oil prices.' Medium-term non-oil growth is expected to approach 4 percent by 2027 before stabilizing at 3.5 percent by 2030. The IMF also noted positive developments in the labor market and inflation. The unemployment rate for Saudi nationals fell to a record low of 7 percent in 2024, surpassing the original Vision 2030 target. Headline inflation, despite a small rise to 2.3 percent in April, remains contained. 'Inflation would remain anchored around 2 percent, supported by a credible peg to the US dollar, domestic subsidies, and an elastic supply of expatriate labor,' the fund projected. On fiscal policy, the IMF deemed the anticipated higher spending in 2025, leading to a deficit above budget targets, as 'appropriate.' 'Given the upfront adjustment and ample fiscal buffers available, staff believes that additional spending restraint in 2025— triggered by lower-than-budgeted oil prices— is not necessary as it would make fiscal policy procyclical and exacerbate the impact on growth,' the statement added. However, it emphasized the need for gradual fiscal consolidation over the medium term, recommending measures like non-oil revenue mobilization, removing energy subsidies, and rationalizing spending. The IMF highlighted the banking sector's resilience but cautioned about the risks associated with strong credit growth. 'Addressing strong credit growth and associated funding pressures would help mitigate risks to systemic financial stability,' the report urged. It welcomed the Saudi Central Bank's recent introduction of a countercyclical capital buffer and ongoing efforts to enhance regulatory frameworks. The fund strongly emphasized the need for continued structural reforms. 'The current environment of heightened uncertainty underscores the importance of continued structural reform efforts to sustain non-oil growth and economic diversification,' the statement concluded. It added: 'The reform momentum should continue irrespective of oil price developments.' This includes strengthening anti-corruption frameworks, enhancing human capital, improving access to finance, fostering digitalization, and deepening capital markets.


Khaleej Times
04-06-2025
- Business
- Khaleej Times
UAE businesses stay resilient amid global challenges
The UAE's non-oil private sector is traversing its softest growth in nearly four years, with a key indicator marking its lowest level in May 2025 since September 2021. Despite this slowdown, the sector remains healthy, buoyed by strong demand, strategic diversification, and optimism in global trade, as highlighted by recent survey data. While challenges like global economic uncertainty and US tariffs loom, UAE businesses are adapting with agility, maintaining a competitive edge in a shifting landscape. The S&P Global UAE Purchasing Managers' Index (PMI) dropped to 53.3 in May 2025, down from 54.0 in April. The PMI stayed above the 50.0 no-change threshold, signalling continued expansion. However, the pace of growth in new orders and output has eased, with output growth hitting its weakest mark in 44 months. Companies cited robust client demand, effective marketing strategies, and diverse product offerings as drivers of new orders, though global trade disruptions, particularly US tariffs, tempered momentum for some. The Dubai PMI, holding steady at 52.9, echoed this trend, reflecting solid but slower expansion, with new orders reaching a four-month high thanks to improved client confidence and competitive pricing. A striking development was the record decline in input stocks, the sharpest in nearly 16 years of survey data, as firms streamlined inventories amid slowing growth and supply constraints. Purchasing activity rose at its slowest pace in 28 months, reflecting cautious stock management. Conversely, employment saw a notable uptick, with job creation reaching a one-year high as firms responded to rising workloads. Backlogs of work, while still significant, grew at their slowest rate in 16 months, indicating a slight easing of pressure on capacity. Inflationary pressures softened, offering some relief. Input cost inflation fell to its lowest since December 2023, with only five per cent of firms reporting higher costs, driven by pricier raw materials and transport. Selling prices rose marginally, as some companies passed on costs while others offered discounts to stay competitive. This aligns with broader trends of declining inflationary pressures, a positive signal for businesses navigating cost challenges. Despite the slowdown, UAE firms remain optimistic about global trade. According to HSBC's 2025 Global Trade Pulse Survey, conducted between April 30 and May 12, 2025, 94 per cent of UAE businesses anticipate strong growth in cross-border activities, outpacing global peers. This resilience stands out against a cautious global backdrop, where two-thirds of firms worldwide report cost increases from trade uncertainties. UAE companies, facing an average seven per cent rise in operational expenses due to tariffs, are countering challenges through advanced planning, digital innovation, and market diversification. This positions the UAE as a leader in global trade optimism, even as geopolitical uncertainties ripple worldwide. Business confidence, however, showed signs of moderation. Only 10 per cent of surveyed firms expect expansion in the year ahead, the lowest optimism since January 2025. This tempered outlook, combined with sharp inventory cuts, suggests firms are bracing for softer growth. Yet, the UAE's non-oil sector continues to perform well, supported by strong fundamentals. David Owen, senior economist at S&P Global Market Intelligence, noted: 'While competitive pressures and weaker trade amid US tariffs have weighed on growth, the UAE economy remains robust. The survey data points to easing momentum but also highlights falling inflationary pressures, offering a silver lining.' 'From an overall perspective, the survey signals that the UAE economy is performing well, but the softer increases in output and new orders hint at momentum easing. Furthermore, the sharp cutback in stocks (which was the fastest on record) and the broadly subdued outlook for activity suggest that firms are gearing up for softer growth,' said Owen. 'Positively, the survey data backs up the trend of falling inflationary pressures, as businesses saw input costs rise at their slowest rate since the end of 2023,' he added.


Reuters
04-06-2025
- Business
- Reuters
UAE non-oil business growth slows in May, PMI shows
ABU DHABI, June 4 (Reuters) - Growth in the UAE's non-oil private sector slowed to its weakest pace in nearly four years in May, a survey showed on Wednesday, as demand remained strong but eased from recent highs. The seasonally adjusted S&P Global UAE Purchasing Managers' Index (PMI) fell to 53.3 in May from 54.0 in April, marking its lowest reading since September 2021, but remained above the 50.0 threshold that indicates growth. The rate of expansion in output was the slowest in 44 months in May, reflecting softening momentum in the non-oil sector even though demand conditions remained supportive. The sub index for output fell to 57.3 in May from 59.4 in April, and was the lowest reading since September 2021. The pace of new order growth remained robust but the sub index dropped to 56.2 in May from April's 56.9 reading, and was the softest in seven months. "Although businesses continued to welcome strong demand from their clients, there were some reports that competitive pressures and weaker trade amid US tariffs had weighed on growth," David Owen, senior economist at S&P Global Market Intelligence, said. The survey highlighted a record decline in inventories as firms streamlined holdings amid slowing growth. The accumulation of backlogs eased to a 16-month low, indicating a softer pace of demand. Business expectations for future output were subdued, with optimism falling to its lowest level since January. Dubai's non-oil private sector growth remained steady, with the headline PMI at 52.9 in May, the same as April, although demand momentum strengthened with the pace of new order growth quickening to a four-month high.