LONDON: Recent fiscal measures in Saudi Arabia will prompt a sustainable rise in government revenues, Fitch Ratings said.
Revenues in 2018 may also get a one-off boost from settlements with wealthy individuals following the anti-corruption campaign launched in November, the ratings agency said in a report released on Thursday.
However Fitch noted that the value and use of the receipts has not been officially confirmed and they are not included in official budget projections.
The Saudi budget, published in December, forecasted the central government fiscal deficit to narrow to 7.3 percent of gross domestic product (GDP) in 2018 from 8.9 percent of GDP last year.
This is expected to be driven by a rise in oil revenues which account for about 63 percent of total government revenues.
Fitch said that limited progress on underlying fiscal consolidation reflected a greater focus on GDP growth targets, which the government highlighted as a reason for pushing back the year for achieving a balanced budget to 2023 from 2020.
Saudi Arabia’s real estate price index rises by 0.4% in Q2
The report said a 1 percent hike in the prices of residential plots jacked up the prices of residential properties
Updated 20 min 15 sec ago
RIYADH: The real estate price index in Saudi Arabia rose by 0.4 percent in the second quarter of 2021 compared to the same period of the previous year, official data showed on Sunday.
The statistics issued by the General Authority for Statistics showed a 0.8 percent increase in the residential real estate prices in the second quarter while prices of commercial and agriculture properties declined by 0.5 percent and 0.2 percent respectively.
The report said a 1 percent hike in the prices of residential plots jacked up the prices of residential properties.
Meanwhile, the Wafi program, which regulates off-plan property activity in the Kingdom, issued a report highlighting its performance during the first half of the year.
Wafi issued 55 licenses for off-plan sales projects providing 24,328 housing units during the first half of 2021.
Off-plan property sales represent a growing sector of the Saudi real estate market, but some consumers are still wary of developers’ abilities to deliver quality homes on time.
The sector has been steadily increasing its share of total residential sales and data from the Wafi program.
According to real estate consultancy company, Knight Frank, off-plan units represent around 9 percent of total existing housing stock, but a massive 60 percent of total future supply in Saudi Arabia.
Saudi Arabia’s real estate sector is a key and effective economic driver for the country’s gross domestic product (GDP) and is connected to at least 120 industries.
Mortgage lending in Saudi Arabia increased 27 percent this year through May, as interest rates decreased to between 1 percent and 4.9 percent, compared to about 6 percent early last year.
Residential real estate financing contracts offered to individuals by local banks reached 133,006 through May, with a value of SR69.5 billion ($18.5 billion), according to data from the Saudi Central Bank (SAMA).
Real estate financing grew by 50 percent compared with the same period in 2020 when SR46.6 billion was lent via 104,000 contracts.
Saudi Arabia’s economy likely to grow in 2021 and 2022, says report
Capital Economics' forecast a further evidence that the Saudi economic recovery has taken off in 2021
Updated 01 August 2021
RIYADHH Saudi Arabia’s economy is poised to grow from 2.2 percent to 4.8 percent in 2021 and from 4.1 percent to 6.3 percent in 2022, said a Capital Economics report.
The new forecasts are further evidence that the Saudi economic recovery has taken off in 2021.
At the start of the year, the Kingdom’s Ministry of Finance said that it expected 3.2 percent growth this year — reversing the pandemic-driven downturn of 2020. The International Monetary Fund forecast just 2.1 percent growth two months ago.
The Saudi economy is expected to maintain growth in the second half of the year. The expansion is also backed by higher oil output amid an OPEC+ agreement.
The Kingdom’s finance, insurance, real estate, and business sectors are likely to expand by 9 percent annually and their relative share to overall economic activity will grow by 12.7 percent.
Meanwhile, the services sector is also likely to grow about 10 percent annually on average, implying that its relative gross domestic product (GDP) share will climb to almost 40 percent in 2030.
Saudi shoppers helping high-end sector rebound to new peaks
GCC retail giant aiming to double revenues in the Kingdom, become dominant player by 2022
Updated 01 August 2021
DUBAI: The Gulf Cooperation Council (GCC) luxury retail sector has recovered to pre-pandemic levels, with high-end brands performing particularly well, as shoppers splash the cash they saved by not spending on entertainment or travel during the last year, according to one of the region’s biggest retailers.
Consultancy firm Bains & Company in April reported that the GCC luxury goods market declined 16.6 percent year on year to $7.4 billion in 2020, with Saudi Arabia down 8 percent and the tourist-dependent UAE declining 25 percent.
However, Michael Chalhoub, president of strategy, growth, innovation and investment and vice-president joint ventures at the Chalhoub Group, which has 559 stores across the GCC and manages brands such as Dior, Swarovski, Fendi and Louis Vuitton, told Arab News that the market has bounced back.
“I think the luxury market, and fashion in particular, has recovered in 2021, at levels even higher than in 2019,” he said.
“Local consumers are traveling less. And so, consumption has been repatriated. And we estimate that, in normal time, between one-third to 50 percent of the luxury consumption of GCC nationals happens abroad in London, Paris and Geneva. But now, because of the pandemic, they’ve had to stay, in particular in Saudi Arabia, where the borders were blocked for most of the first half of the year,” he added.
With gyms, restaurants, entertainment venues and travel off limits for a long period, Chalhoub said that shoppers now had more disposable income and were feeling free to spend their savings.
“I would say that average income has gone higher because of a lack of entertainment expenses. What people aren’t spending in restaurants and travel, they are probably spending it on taking care of themselves,” he said.
However, Chalhoub said that the rebound differed across retail segments. Very high-end luxury brands are performing much better than premium or affordable brands. Jewelry, fragrances and beauty brands are seeing strong growth, but he observed that makeup was still down, mainly due to consumers wearing masks and not leaving the house as often.
“With fashion, I think that we’re up by 5 to 7 percent in the region versus 2019, mainly with luxury fashion and even more so with high-end luxury,” he said, looking at the industry as a whole.
Many retailers have seen triple-digit growth in their online sales during 2020, and the Chalhoub Group accelerated its digitalization strategy in line with the wider industry. “If we were to compare 2021 numbers to 2019, we’re probably talking about 100 percent growth for the industry. And this is incredible. I think the numbers I had were plus 96 percent in the GCC as a whole and even 138 percent just in the UAE,” he said.
However, while online sales might be popular for grocery or food outlets, high-end fashion consumers still like to feel, touch and try on clothing before buying.
For this reason, Chalhoub said that the company expects a higher percentage of returns when it comes to online high-end fashion. “We’re inviting our customer to say try it on and then send it back if you need to,” he said.
With Saudi Arabia less dependent on international tourists for retail sales, the Kingdom largely avoided the slump in sales last year. Chalhoub Group has operated in the Kingdom since 1975, where it has six offices, 215 stores and about 3,600 employees.
It now controls 38 percent of the Saudi market, 48 percent of fashion and 55 percent of beauty, but it is aiming to become the largest player in the sector by the end of next year.
“We’ve made Saudi Arabia a main focus for ourselves; we want to make sure that we cater for the new Saudi customers as much as possible. We have a population there that is young and really enthusiastic about some of the transformation that is happening there,” Chalhoub said.
“We’re investing a lot into Saudi Arabia. The objective that we had set ourselves about six months ago was to double our revenues there in eighteen months. And that means investing more and catering to those customers spending more locally rather than internationally,” he added.
One of the ways the group is aiming to capture more of the Saudi market is by tapping into the Kingdom’s local fashion talent. In early July, the company launched Fashion Lab, a first-of-its-kind initiative in the Kingdom, offering local entrepreneurs the chance to win $15,000 in funding to help establish their fashion brands.
Successful participants will get to take part in a two-week “boot camp,” which will help them navigate through the different elements of developing their brand, including marketing, supply chain management, content creation and media exposure.
Looking forward, the Bain & Company report said: “With about 40 percent of the population aged under 25, Saudi Arabia will likely remain the biggest engine of growth for the regional luxury industry in coming years.”
Saudi Arabia sets new rules for fruit, vegetable imports
The ministry has launched a new system for vegetables and fruit imports to support local production
Updated 01 August 2021
RIYADH: Saudi Arabia’s Ministry of Environment, Water, and Agriculture on Saturday called on fruit and vegetable suppliers to complete all formalities to obtain import licenses before the Aug. 9 deadline.
After Aug. 9, no unlicensed supplier will be allowed to import fruit and vegetables. Those interested can visit the following link to apply for a license: https://eservices.mewa.gov.sa/request/111111.
An import license will be valid for three to 10 years depending on the license category, the ministry said.
Saudi authorities have also issued health guidelines for imports like all shipments should be free of pesticide residues or within the limit allowed by the Kingdom’s laws.
The ministry has launched a new system for vegetables and fruit imports to support local production, enforce quality control and ensure food security in the Kingdom.