Saudi economy to grow by 1.5% this year, says Jadwa

Since Saudi Arabia’s official budget was published in December, there have been multibillion-riyal interventions in the economy. (Reuters)
Updated 04 February 2018

Saudi economy to grow by 1.5% this year, says Jadwa

DUBAI: The Saudi Arabian economy will grow by an estimated 1.5 percent in 2018, according to a new report from Riyadh-based economic analysts at Jadwa Investment.
“We expect an improvement in the Saudi economy in the year ahead, supported by both the oil and non-oil sector. Oil sector gross domestic product (GDP) is expected to improve, in part, due to rises in oil production as OPEC and non-OPEC countries gradually exit from cuts at some point during the year,” said Fahad Al-Turki, Jadwa’s chief economist.
“Growth in the non-oil sector is forecasted to improve as an expansionary budget, with a specific set of stimulus packages, lifts activity.”
The new estimate of GDP this year is broadly in line with the recent update from the International Monetary Fund, which forecast 1.6 percent growth. It compares with a 0.7 percent contraction in the economy in 2017.
However, both IMF and Jadwa’s forecasts are lower than the official estimate for economic growth made at the time of the Saudi budget in December, which suggested 2.7 percent overall growth in the Kingdom’s economy this year, largely fueled by a forecast 3.7 percent expansion in non-oil activity. Jadwa expects non-oil growth to be limited to 1.1 percent, up from 0.7 percent last year.
Since the official budget estimate, there have been multibillionriyal interventions in the economy, in the form of the Citizens Account — the government fund to compensate less well-off citizens for the rising cost of living — and extra allowances for pubic and military employees, as well as a stimulus package aimed at small- to medium-sized enterprises (SMEs).
“The oil sector will see the largest improvement in the year ahead, rising to 1.5 percent in 2018, compared to a decline of 3 percent in 2017. The recovery in the oil sector will be driven by a modest rise in Saudi oil production and the start-up of the Jizan refinery during the year,” Jadwa said.
The stimulus packages, on top of what economists agreed was the biggest and most expansionary budget in the Kingdom’s history, will be particularly growth-enhancing for the private sector, Jawda said.
“We see transport and communications as stand-out sectors in 2018. Besides the Public Investment Fund investing SR14 billion in railroads and infrastructure projects, the King Salman International Complex for Maritime Industries and Services is expected to commence major production operations during the year. The complex, which will be the largest maritime industries complex in the region, underlines the Kingdom’s efforts in diversifying the economy’s sources of income, as set out under the Vision 2030 strategy.”
The non-oil sector is regarded as crucial, with revenue from this source enhanced by the introduction of energy price reforms, value added tax, land tax, and expat levies, to bring in as much as SR291 billion for the national economy.
Jadwa also warned of risks from these measures. “Whilst consumer spending could be affected by the implementation of VAT, energy price reform will impact the running costs of private companies and discretionary income of a number of more affluent households.
“That said, we see the set of expansionary measures, implemented via the private sector stimulus package, as well as payments received under the Citizens Account plus the recently announced cost of living allowances, as being sufficient to bring about solid growth,” it added.


Huawei’s third-quarter revenue jumps 27% as smartphone sales surge

Updated 17 October 2019

Huawei’s third-quarter revenue jumps 27% as smartphone sales surge

  • American companies, significantly disrupting its ability to source key parts
  • Huawei was all but banned by the United States in May from doing business with American companies

SHENZHEN, SHANGHAI: Huawei Technologies Co. Ltd’s third-quarter revenue jumped 27%, driven by a surge in shipments of smartphones launched before a trade blacklisting by the United States expected to hammer its business.
Huawei, the world’s biggest maker of telecom network equipment and the No. 2 manufacturer of smartphones, was all but banned by the United States in May from doing business with American companies, significantly disrupting its ability to source key parts.
The company has been granted a reprieve until November, meaning it will lose access to some technology next month. Huawei has so far mainly sold smartphones that were launched before the ban.
Its newest Mate 30 smartphone — which lacks access to a licensed version of Google’s Android operating system — started sales last month.
Huawei in August said the curbs would hurt less than initially feared, but could still push its smartphone unit’s revenue lower by about $10 billion this year.
The tech giant did not break down third-quarter figures but said on Wednesday revenue for the first three quarters of the year grew 24.4% to 610.8 billion yuan.
Revenue in the quarter ended Sept. 30 rose to 165.29 billion yuan ($23.28 billion) according to Reuters calculations based on previous statements from Huawei.
“Huawei’s overseas shipments bounced back quickly in the third quarter although they are yet to return to pre-US ban levels,” said Nicole Peng, vice president for mobility at consultancy Canalys.
“The Q3 result is truly impressive given the tremendous pressure the company is facing. But it is worth noting that strong shipments were driven by devices launched pre-US ban, and the long-term outlook is still dim,” she added.
The company said it has shipped 185 million smartphones so far this year. Based on the company’s previous statements and estimates from market research firm Strategy Analytics, that indicates a 29% surge in third-quarter smartphone shipments.
Still, growth in the third quarter slowed from the 39% increase the company reported in the first quarter. Huawei did not break out figures for the second quarter either, but has said revenue rose 23.2% in the first half of the year.
“Our continued strong performance in Q3 shows our customers’ trust in Huawei, our technology and services, despite the actions and unfounded allegations against us by some national governments,” Huawei spokesman Joe Kelly told Reuters.
The US government alleges Huawei is a national security risk as its equipment could be used by Beijing to spy. Huawei has repeatedly denied its products pose a security threat.
The company, which is now trying to reduce its reliance on foreign technology, said last month that it has started making 5G base stations without US components.
It is also developing its own mobile operating system as the curbs cut its access to Google’s Android operating system, though analysts are skeptical that Huawei’s Harmony system is yet a viable alternative.
Still, promotions and patriotic purchases have driven Huawei’s smartphone sales in China — surging by a nearly a third compared to a record high in the June quarter — helping it more than offset a shipments slump in the global market.