COP28: UN climate event mobilizes over $57bn in first four days

COP28: UN climate event mobilizes over $57bn in first four days
The UN’s climate action summit has mobilized over $57 billion from various sectors in just four days of the event. (AFP)
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Updated 04 December 2023

COP28: UN climate event mobilizes over $57bn in first four days

COP28: UN climate event mobilizes over $57bn in first four days

DUBAI: The UN’s climate action summit has mobilized over $57 billion from various sectors in just four days of the event, with financial pledges and commitments covering finance, health, food, nature and energy.

On climate finance, the UAE announced on opening day a $30 billion catalytic fund, ALTÉRRA, with an emphasis on unlocking private finance across the Global South.

The COP28 host-country also partnered with the Bill & Melinda Gates Foundation to contribute $200 million for ‘Food Systems, Agriculture Innovation and Climate Action,’ focused on agricultural research, scaling agricultural innovations and funding technical assistance.

It also announced a $150 million pledge for water security.

The World Bank meanwhile announced an increase of $9 billion annually to finance climate-related projects.

In a historic move, the Climate Loss and Damage fund was finally operationalized with about $750 million pledged in the first 48 hours of COP28 to help vulnerable nations cope with the impacts of climate change.

In addition, $3.5 billion has been announced to replenish the Green Climate Fund; $2.7 billion was pledged for health; $2.6 billion for food systems transformation; $2.6 billion to protect nature; $467 million for urban climate action and $1.2 billion has been committed for relief, recovery and peace.

On energy, $2.5 billion was mobilized for renewables and $1.2 billion for methane emission reduction. In addition, $568 million was pledged to drive investments in clean energy manufacturing.

Meanwhile, eight new declarations have been announced that will help transform every major system of the global economy including food systems, health and renewable energy.

Saudi Arabia’s space sector soars with strategic initiatives

Saudi Arabia’s space sector soars with strategic initiatives
Updated 45 min 59 sec ago

Saudi Arabia’s space sector soars with strategic initiatives

Saudi Arabia’s space sector soars with strategic initiatives
  • Initiative aims to bolster the nation’s position in global space economy by developing local capabilities

RIYADH: Saudi Arabia’s bid to become a leading player in the global space industry gained momentum with the recent unveiling of Neo Space Group, a strategic initiative to foster private sector growth. 

Backed by the Public Investment Fund, the group will invest in local and international assets, venture capital opportunities, and cutting-edge technologies to advance the sector, aligning with Saudi Vision 2030’s economic diversification goals. 

NSG aims to bolster the nation’s position in the global space economy by developing local capabilities and providing innovative satellite and space solutions. 

The development, spearheaded by the Communications, Space, and Technology Commission and the Saudi Space Agency, has garnered positive reactions from industry leaders and local talent, all of whom see immense potential in the Kingdom’s burgeoning space ambitions. 

In an interview with Arab News, Amar Vora, head of space at Serco Middle East, expressed strong support for the establishment of NSG, calling it a “bold step forward” that will stimulate the growth of the private space sector in Saudi Arabia. 

“The establishment of the NSG is a welcomed move that will champion growth for the private space sector in the Kingdom,” Vora said. “By working with CST and SSA, the establishment of the NSG will help unlock strategic investments and partnerships with the commercial sector that are aligned with national priorities.”

Serco, a global firm headquartered in Dubai with over 40 years of experience in the space industry, is committed to localizing its services in Saudi Arabia. “We are committed to transferring our knowledge and know-how from our international space business into the Kingdom through our training programs,” Vora added. 

“Our role as a service integrator means that we look to collaborate with innovative companies (small to large) to deliver services across the industry,” he also said. 

The emphasis on developing a robust value and supply chain within Saudi Arabia is seen as crucial for accelerating the sector’s sustainability. 

The emphasis on developing a robust value and supply chain within Saudi Arabia is seen as crucial for accelerating the sector’s sustainability. (SPA)

Vora highlighted the importance of investments in localization and startups across key segments of the space sector, which will help build a dynamic local ecosystem. 

“Going forward, building up the value and supply chain in the Kingdom is essential to accelerate the long-term sustainability of the sector,” he said, adding: “Importantly, NSG’s investments into localization and startups across key segments of the space sector will facilitate the growth of the local ecosystem.”   

Investing in national talent is another cornerstone of Saudi Arabia’s strategy to advance its space industry, and Vora stressed the dual benefits of such investments, addressing both immediate industry needs and long-term growth.  

He added: “Investing in national talent benefits both the immediate needs of the growing space industry and its long-term growth, stability, and success.”  

Vora said that enhancing the skill set of future professionals is expected to bolster the economy by creating a proficient workforce for high-tech jobs. The sector’s growth will provide ample opportunities, with local talent preserving intellectual capital within the Kingdom.  

Speaking to Arab News, Sarah Alhabbas, a graduate of Serco’s Space Graduate Program, shared her journey and shed light on the positive impact of investing in local talent. 

“When I heard that hundreds of nationals had applied to Serco’s Space Graduate Program, I was very proud to have been selected,” Alhabbas said.  

She added: “When I joined, I gained some great insights into what the company’s strategy was and how that relates to Saudi Vision 2030, and I was able to learn more about the actions being put into place to live out the company’s purpose of impacting a better future.” 

As a participant in Serco’s Space Graduate Program, Alhabbas undertook an intensive six-month course at Serco’s COP-2 facilities in Darmstadt, Germany, where she enhanced her theoretical knowledge with practical applications and insights from industry experts. 

“I am excited about transferring that knowledge back to my colleagues and partners in Saudi Arabia after I graduate from the program in the summer,” she said. 

Alhabbas underscored the importance of investing in Saudi talent for the long-term sustainability and growth of the space industry. 

“(Investing in local talent) will help unleash the potential and capabilities of Saudi talent, which can also inspire future generations’ interest in the sector,” she said. 

The graduate added that a strong understanding is crucial “to move toward a more knowledge-based economy to attract investment and lead to economic growth.” 

We are committed to transferring our knowledge and know-how from our international space business into the Kingdom through our training programs.

Amar Vora, head of space at Serco Middle East

As a woman in the field of space technology, Alhabbas has encountered and overcome various barriers, particularly in networking. “One barrier that I encountered at the beginning was the networking challenge; at events, females were in the minority.” 

Alhabbas also joined the space training program offered by CST, which has broadened her knowledge and connections within the sector. 

“The sector has been evolving significantly, especially in Saudi, and more women are exploring their interest and getting involved in space, and I hope I can help to inspire,” she said. “The space courses offered by CST are giving me the chance to meet women who are interested in entering this field which is of real benefit.” 

Alhabbas praised the government’s support for women’s education and training in space technology and said: “There is also much government support for this, with policies being implemented and programs to support women’s education and training.” 

Role models like Saudi’s first female astronaut, Rayyanah Barnawi, play a pivotal role in inspiring future generations. Barnawi has “shed light on the possibilities and capabilities of women in the field; she has truly inspired the future generation.” 

Looking to the future, Alhabbas aims to become a STEM (science, technology, engineering, and mathematics) and space ambassador in Saudi Arabia. “There’s a tremendous opportunity that lies ahead, and I’m proud to be part of it,” she said. 

The graduate expressed her ambition to encourage more talent from future generations to consider a role in the space industry, calling on private and public sector entities to work together to showcase the various career paths available. 

With initiatives like the NSG and the commitment of companies like Serco, Saudi Arabia’s space sector is on a trajectory of significant advancements. 

Strategic partnerships, a focus on national talent development, and government support are set to propel the Kingdom into a new era of space exploration and innovation.

Saudi Arabia’s foreign direct investment stock hits $218bn in Q1

Saudi Arabia’s foreign direct investment stock hits $218bn in Q1
Updated 47 min 45 sec ago

Saudi Arabia’s foreign direct investment stock hits $218bn in Q1

Saudi Arabia’s foreign direct investment stock hits $218bn in Q1
  • Growth reflects increasing confidence among foreign investors in the Saudi investment ecosystem

RIYADH: Saudi Arabia’s foreign direct investment stock reached SR817.7 billion ($218 billion) in the first quarter of 2024, marking a 6.1 percent rise compared to the same period last year, recent data showed.

A report released by the Ministry of Investment indicated that this growth reflects increasing confidence among foreign investors in the Saudi investment ecosystem.

The FDI stock represents the total accumulated value of FDIs held in the Kingdom. It is a cumulative measure that includes all past and present investments made by foreign entities in businesses, real estate, and other assets within the country.

The ministry had previously reported that inflows in the first quarter amounted to approximately SR17 billion, reflecting a growth of 0.6 percent compared to the SR16.9 billion recorded in the same period of 2023.

Brendan Marais, partner at Kearney Middle East & Africa told Arab News that “one of the key factors that sets Saudi Arabia apart from other emerging markets is its deliberate focus on building FDI-attraction capabilities.”

“This strategic approach has significantly boosted the market’s confidence in the Kingdom’s creditworthiness. The $12 billion raised from the sale of multiple-tenor bonds at the beginning of the year and its rise to the third position in the 2024 Kearney FDI Confidence Index from 2023 are clear indicators of the success of these efforts,” he added.

The Kingdom aims to attract $100 billion in FDI by 2030 as part of its broader economic diversification efforts under Vision 2030. Despite global economic challenges, including geopolitical tensions and high interest rates impacting FDI flows worldwide, Saudi Arabia has seen positive annual growth in investments, positioning itself as an attractive destination for international investors.

The Organization for Economic Co-operation and Development latest data indicated that global FDI continued to decline by 12 percent in 2023 compared to the previous year. In contrast, investments into OECD countries increased by 11 percent during the same period, while those into G20 countries decreased by 34 percent. 

Saudi Arabia has successfully built credibility with the international investment community and is well positioned to achieve its ambitious target of $100 billion of FDI by 2030.

Elvie Lahournere, Principal at Kearney Middle East & Africa

Meanwhile, FDI inflows in Saudi Arabia grew by 12.1 percent annually, reaching SR72 billion in 2023, excluding the Aramco deal.

Saudi Arabia continues to enhance its attractiveness by improving business laws, fostering human capital development, and nurturing a competitive environment for innovation, which are essential in sustaining its FDI growth trajectory.

Kingdom’s approach navigating global challenges

Rudolph Lohmeyer, partner at Kearney Middle East & Africa, said, “For countries, this global instability is spurring efforts to strengthen national resilience and reduce exposure to economic coercion, including by developing national economic capabilities and diversifying global supply networks.”

“FDI is a strategically central means of meeting both of these imperatives and nowhere are we seeing more decisive efforts to enhance FDI attraction than in the GCC,” he added

Lohmeyer told Arab News that as global instability and competition increase, and investors seek safer, geopolitically stable countries, the Kingdom’s priorities will continue to evolve from its strong, long-term foundations.

“Specifically, stabilizing the region geopolitically represents a central imperative. The Kingdom’s balanced geopolitical positioning and bold diplomatic efforts are clearly geared to this end,” he added.

He also noted that deepening its role as a regional and global hub will enhance Saudi Arabia’s attractiveness to investors by expanding its market. Additionally, as technology and AI transform productivity and the global economy, the Kingdom must foster a competitive environment for innovation. 

Houssem Jemili of Bain and Co. mentioned to Arab News in April that Saudi Arabia leads technology spending in the Middle East and North Africa, investing roughly 2.5 times more than other countries in the region, with annual growth in this expenditure.

According to the ministry’s report in May, this was further demonstrated by innovation and entrepreneurship attracting a range of funding partners to Saudi Arabia, leading to the completion of over 53 percent of investment deals in the first quarter of 2024.

Role of human capital in driving FDI

Marco Vasconi, partner at Kearney Middle East & Africa said, “Investment in human capital development is imperative to drive overall investment, including FDI, and economic growth.”

“As such, human capital is one of the key levers inputs into economic activities, especially in knowledge-intensive sectors, which underpins the development and growth of some of the sectors prioritized for Saudi Arabia’s economy,” he added.

Vasconi noted that the Kingdom is concentrating on two key areas for human capital development, enhancing domestic talent and attracting global professionals to Saudi Arabia.

Domestic efforts include overhauling the entire human capital development journey, from early childhood through K-12 to higher education, technical and vocational training, and lifelong learning. 

Stabilizing the region geopolitically represents a central imperative. The Kingdom’s balanced geopolitical positioning and bold diplomatic efforts are clearly geared to this end.

Rudolph Lohmeyer, Partner at Kearney Middle East & Africa

According to the expert, there is a strong emphasis on both basic skills and advanced thinking skills, such as critical and system thinking, as well as future-oriented skills to meet evolving requirements.

The education and training systems are being aligned with labor market needs to enhance employability and address future job demands. Additionally, there is a concerted push to up-skill and reskill the existing workforce to adapt to the changing workplace environment.

Efforts to attract global talent include enhancing Saudi Arabia’s appeal as a place to live and work through improved access to education, healthcare, and vibrant cultural life.

Additionally, the Kingdom is simplifying entry for skilled professionals, entrepreneurs, and investors while offering a robust ecosystem of economic and business opportunities.

FDI target of $100 billion by 2030

Elvie Lahournere, principal at Kearney Middle East & Africa said, “Saudi Arabia has successfully built credibility with the international investment community and is well positioned to achieve its ambitious target of $100 billion of FDI by 2030.”

Lahournere stressed the Kingdom’s geographic advantages, a young and educated population, a large local market, and growing regional integration in helping it achieve its ambitious target.

“In fact, we already see tangible outcomes from investors’ perspective in this year FDI Confidence Index world ranking that positioned Saudi Arabia at the 14th place rising from 24th last year and demonstrating the investor’s appetite for this vibrant emerging market,” she added.

Saudi Arabia has revamped its business laws to attract foreign investment by allowing 100 percent foreign ownership, establishing a dispute settlement regime, enacting a bankruptcy law, implementing digital licensing procedures, and offering fiscal incentives like zero personal income tax and a 20 percent flat corporate levy, the lowest in the G20.

AI startup DXwand to set up local office in Riyadh

AI startup DXwand to set up local office in Riyadh
Updated 48 min 37 sec ago

AI startup DXwand to set up local office in Riyadh

AI startup DXwand to set up local office in Riyadh
  • DXwand’s expansion strategy firmly aligned with Kingdom’s Vision 2030

CAIRO: Saudi Arabia’s growing business landscape has encouraged regional and global companies to establish a local presence in the burgeoning market. 

Egypt-born generative artificial intelligence startup DXwand is leaving no stone unturned as it aims to get closer to its clients with an on-ground team. 

In an interview with Arab News, Ahmed Mahmoud, CEO of DXwand, shared the company’s strategic insights into establishing a local office in Riyadh by mid-year. 

“We already started formalities and got the MISA (Saudi Arabia’s Ministry of Investment) license. The exact location is still in discussion, but it shall be in the amazing capital of Saudi, Riyadh,” he said. 

One step closer 

Mahmoud emphasized the importance of delivering value and impact swiftly with quick wins and is also keen to demonstrate the company’s differentiated position in technology and long-term ambitions in partnerships. 

He said: “That objective is planned to be achieved with local partners, in technology and other industries, to ensure our success. We already have several partners in place in Saudi, and our plan is to multiply this number by the end of 2024.” 

DXwand’s expansion strategy is firmly aligned with Saudi Arabia’s Vision 2030, focusing on economic diversification and digital transformation. 

Mahmoud said: “By focusing on delivering impact on Saudi’s focus areas of its 2030 vision, especially in economic diversification, quality of life, environmental sustainability, and culture and entertainment, we have set long-term goals and corresponding initiatives to support and impact these areas.” 

He further explained: “DXwand’s expansion always involves local partners who are industry-focused or technology builders, leading to larger contributions to each country’s economy, delivering faster and deeper impact, and achieving marvelous results with local talent and resources who understand the culture and local pains very well.” 

One of these partners includes Gulf business expansion platform AstroLabs which aims to leverage DXwand’s strong presence in the US, the UAE, and Egypt. 

Mahmoud emphasized the importance of working with official bodies to enhance their sector’s services. 

“Collaboration with the Saudi government is a key cornerstone to deliver our expansion vision, and we are in the process of identifying potential collaboration areas of focus and concerned government entities,” he said.

This collaboration is intended to support DXwand’s alignment with the country’s evolving regulatory environment. 

Our solutions align with the country’s goals to enhance digital infrastructure, improve government services, and foster innovation.

Ahmed Mahmoud, CEO of DXwand

“Regulations for AI is an emerging area not just for Saudi but also worldwide. We believe in early engagement with regulators to benefit both parties in understanding risks and building proactive mitigations. We believe AI companies should be responsible, regardless of regulations, to build safe AI technology and ensure it follows standards of privacy and safety worldwide,” Mahmoud said.

“This shall help us adapt to any regulatory needs in Saudi as we are proactively mitigating risks and ensuring a safe experience for our community,” he added. 

Mahmoud said the company has been growing yearly by a multiple of two since 2020,  and he is looking to maintain this trajectory along with delivering two nationwide impact initiatives per year.

He added that Saudi Arabia would be a major geography for one of these national impact initiatives in 2024. “We believe Saudi has all needed success elements to deliver not just one of our national initiatives, but it could even be the best delivered,” he said. 

Mahmoud also revealed that the company has three new products in the pipeline, leveraging their generative AI technology, although details are still under wraps. 

“With the help of our co-build partners, we have three new products in the pipeline leveraging our same generative AI technology. We can’t at the moment share more details about them while we shall have them announced with relevant partners very soon,” he said.

Expanding to Saudi Arabia is pivotal for DXwand’s strategy due to factors like alignment with Vision 2030, market opportunities, and government support, Mahmoud highlighted. 

He further explained the alignment of DXwand’s AI solutions with Vision 2030’s ambitions for economic diversification and digital transformation.

“Our solutions align with the country’s goals to enhance digital infrastructure, improve government services, and foster innovation,” he said. 

He added that significant investments in sectors such as healthcare, education, financial services, and tourism present lucrative opportunities for DXwand. 

Government support for a knowledge-based economy and technology investment also aligns with his company’s objectives, Mahmoud said. 

Initiatives to attract foreign investments and create a favorable business environment make Saudi Arabia a strategic location that offers access to other Middle Eastern markets, serving as a springboard for regional expansion, Mahmoud explained. 

The tech-savvy Saudi population provides a receptive market for AI-driven solutions. “This demographic is receptive to adopting new technologies, creating a conducive environment for AI solutions,” he said.

Business fundamentals 

Regarding funding, DXwand has raised $6.7 million since its foundation, with the latest $4 million series A round closing in December 2023. This investment will ignite the establishment of DXwand in Saudi Arabia, fostering strategic partnerships with local partners, educational institutes, and strategic clients. 

Mahmoud said: “We plan to use part of the fund to ignite activities of first establishment of DXwand in Saudi and fostering strategic partnerships to build an ecosystem that both delivers DXwand’s ambition of growth while partnering with Saudi to impact and accelerate the execution of its 2030 vision outcomes and land nationwide impact.” 

Addressing industry challenges in Saudi Arabia, Mahmoud discussed the hype surrounding generative AI and DXwand’s  approach to finding niche solutions. 

He noted that DXwand’s platform, DXP, is designed to solve issues such as high large language model costs, lack of managed accuracy measurement, and slow time to market. 

“DXwand’s platform DXP offers over 90 percent cost optimization leveraging low-end LLM offerings, while increasing accuracy by over 30 percent using one tool that enables experiments to measure and RAG (retrieval-augmented generation) to optimize accuracy and costs easily,” Mahmoud said. 

DXwand operates on a subscription-based business model, selling its products with annual or monthly subscriptions relevant to the problem size, represented by conversation volume or user numbers. 

Mahmoud stated that DXwand is a profitable company with a healthy financial model, designed to ensure profitable unit economics. 

The motivation behind founding DXwand stemmed from Mahmoud’s experience at Microsoft, where he saw the potential for AI ventures focused on the region’s cultural and linguistic needs. 

“This potential was not served and it gave me the temptation to take a leap of faith and resign from such a reputable international Silicon Valley giant to start DXwand’s journey,” he stated. 

Key performance indicators for DXwand include LLM cost optimization, accuracy overtime, new sign-ups, new contracts, new partners, and time to market. 

Mahmoud emphasized the importance of managing growth carefully in Saudi Arabia to maintain reputation and customer experience. 

“For Saudi specifically, as we are still newly introduced, I would focus on new partnerships, new client sign-ups, and their experience with costs and accuracy optimization,” he noted. 

Mahmoud assesses the current market landscape in Saudi Arabia for AI and technology as rapidly evolving, with numerous opportunities and challenges. 

He highlighted the Saudi government’s leadership and investments in economic diversification, digital transformation, artificial intelligence, and talent development. 

“With government leadership and investments in economy diversification, digital transformation, artificial intelligence, and talent development, we foresee a great growth opportunity with such an emerging market with a remarkable GDP (gross domestic product) and population,” he stated. 

Regarding industry forecasts, Mahmoud anticipates a downturn in adoption due to economic factors and the costs of operating generative AI, impacting their business cases. However, he sees this as an opportunity. 

“We foresee a downturn in adoption impacted by economic factors and costs of operating generative AI and its reflections on their relative business cases, which is a great opportunity for the upcoming year or two to leverage this challenge if you have a solution that can deliver such technology with cost efficiency and ability to scale fast,” he explained.

Jobs boost for Saudi citizens in engineering roles

Jobs boost for Saudi citizens in engineering roles
Updated 15 sec ago

Jobs boost for Saudi citizens in engineering roles

Jobs boost for Saudi citizens in engineering roles
  • The new policy comes into effect on July 21 will affect private sector companies employing five or more workers in engineering roles

RIYADH: Employment of Saudi citizens in the engineering sector is set to increase under plans announced by the Ministry of Human Resources and Social Development.

In a joint initiative with the Ministry of Municipal and Rural Affairs and Housing, the ministry will implement a 25 percent localization quota for engineering professions, the Saudi Press Agency reported.

The new policy comes into effect on July 21 will affect private sector companies employing five or more workers in engineering roles.

The initiative is part of the Kingdom’s broader strategy to create more attractive and productive job opportunities for Saudi nationals across the country.

The Ministry of Municipal and Rural Affairs and Housing will take charge of monitoring and implementing the policy.

According to SPA, the ministry aims to ensure that the localization efforts align with labor market demands and the specifics of engineering specializations.

To support this transition, the government is offering a range of incentives and support programs to private sector establishments. These include support for recruitment, candidate search, necessary training and qualification, employment, and long-term employment stability.

Companies complying with the new regulations will also gain priority access to various localization support programs and employment initiatives through the Human Resources Development Fund (HADAF).

The Ministry of Human Resources and Social Development has published a detailed procedural guide on its website, outlining the localization process, affected professions, and required quotas. Officials have stressed the importance of adherence to these new regulations, warning that non-compliant establishments will face legal consequences.

IMF welcomes Saudi recalibrations on Vision 2030 projects

IMF welcomes Saudi recalibrations on Vision 2030 projects
Updated 19 July 2024

IMF welcomes Saudi recalibrations on Vision 2030 projects

IMF welcomes Saudi recalibrations on Vision 2030 projects
  • IMF’s revision of KSA economic output is largely due to oil production cuts

RIYADH: The International Monetary Fund has welcomed recent recalibrations and adjustments by Saudi Arabia on some of its megaprojects under Vision 2030.

“We are almost at a midpoint in the Vision 2030,” said Jihad Azour, the IMF director of the Middle East and Central Asia department, and “those recalibrations are part of the classical revision of any medium-term strategy.”

The Kingdom is conducting a review of its major projects, reprioritizing spending, diverting funds and adjusting budgets, according to a recent report by Bloomberg News, while in May, Reuters also reported that the Public Investment Fund “is weighing a reorganization that includes reprioritising projects and reviewing some expenses.”

Azour said these are welcomed by the IMF as Saudi authorities are now looking at and recalibrating their investment programs.

“What is driving the non-oil growth in the Saudi economy is a mix of increasing demand, the impact of structural reforms that have, for example, improved economic activity but also improved the employment indicators, we saw a doubling of the women participation in the economy, (and) a drop in the unemployment,” Azour said during an interview with Joumanna Bercetche on Bloomberg’s Horizons Middle East and Africa program.

Structural reforms, investment, and increasing demand by opening a number of new sectors are driving the growth in the economy, he added.

“The management of the economy, the ability to keep prices under control and the translation of economic growth into job creation are steps in the right direction in accelerating the diversification of the economy and growing the size of the non-oil sector,” he also said.

Earlier this week, the IMF downgraded the Kingdom’s economic growth by nearly 1 percentage point to 1.7 percent this year, down 0.9 percentage points from the agency’s previous forecast in April of 2.6 percent.

In its World Economic Outlook update, the IMF also revised the country’s output increase to 4.7 percent next year, down 1.3 percentage points from its April forecast of 6 percent.

“When we look at the non-oil economic activity, it is still growing at healthy rates and on average, we expect for the next medium term to exceed 4 percent,” Azour said, adding: “Inflation is still low and it has been revised slightly downward (to) 1.7 percent this year, which is a very good control over prices and our expectation is that inflation will remain around 1.9 to 2 percent in the medium term.”

He said the main reason for the IMF’s revision is due to the OPEC+ agreement to limit oil output being extended to September 2025 and the gradual reduction in the Kingdom’s voluntary production cuts.

In June, the group agreed to extend most of its deep oil output cuts for 2024 and to start phasing them out next year. Member countries have begun cutting output by 5.86 million barrels per day, or around 5.7 percent of global demand.

“We had to revise technically the growth for the oil sector, and for the non-oil sector, I would say, the level of growth is still higher than the global growth. 3.7 percent is our expectation for the non-oil sector this year, and in the medium term, we expect the non-oil sector to grow at above 4 percent.”

The IMF forecast that global growth will reach 3.2 percent this year and 3.3 percent next year, while the Middle East and North Africa region is projected to grow 2.2 percent this year, down half a percentage point from three months ago.

Azour acknowledged that the instability in the region and geopolitical tensions have a great impact on economic activity, including the war in Gaza and attacks on shipping that are disrupting trade routes in the Red Sea and Suez Canal.

“We are still seeing that as a threat, especially because of the insecurity (that) has affected the trade that usually goes through the Red Sea and Suez Canal and affected slightly economic activity in a certain number of countries who benefit from this flow of trade,” he said.

The IMF is seeing that the volume of commerce has declined drastically through the Red Sea, especially for container shipping, where two-thirds of the trade has dropped compared to the same period last year, Azour said, adding that the agency has also seen a slight increase in the cost of transport.

“We saw a rapid response and a high level of flexibility in adjusting to that and therefore it did not lead to a disruption in oil and gas, and this is something that had to stabilize the market and reduce the level of volatility that we saw in the first few weeks of the war in Gaza,” he said.

The oil and gas and the financial markets recovered after a short period of volatility, Azour also said, but “in both cases now it’s much more dependent on global developments on the supply and demand for oil, and for the markets, it’s now much more linked to the developments in the international financial markets.”

The comments came as the Minister of Economy and Planning, Faisal Alibrahim, met with IMF Managing Director Kristalina Georgieva in Riyadh to discuss the “prospects for global and regional growth in light of the latest economic developments,” the ministry said in a statement. 

They also reviewed the most prominent developments and trends in the local economy and discussed enhancing cooperation between the Kingdom and the fund. 

He also held separate talks with Azour and IMF Chief Economist Pierre-Olivier Gourinchas.