Saudi Arabia’s first natural gas storage project becomes operational

Saudi Arabia’s first natural gas storage project becomes operational
The facility is designed to reintroduce up to 2 billion standard cubic feet of natural gas per day into the Kingdom’s Master Gas System. Supplied
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Saudi Arabia’s first natural gas storage project becomes operational

Saudi Arabia’s first natural gas storage project becomes operational

RIYADH: Saudi Arabia has officially launched operations at the Hawiyah Gas Storage facility, marking its first project dedicated to storing natural gas through the injection of processed fuel. Developed by Aramco, the facility is designed to reintroduce up to 2 billion standard cubic feet of natural gas per day into the Kingdom’s Master Gas System, an extensive network of pipelines that connects key production and processing sites to customers nationwide.

This initiative is set to help meet the rising energy demand in the country, particularly during peak periods, as announced by the Ministry of Energy on X. The project plays a crucial role in managing seasonal demand fluctuations, supporting the Liquid Fuel Displacement Program, and reducing carbon emissions.

Launched as part of Saudi Vision 2030, the initiative aims to displace 1 million barrels per day of liquid fuel across the utilities, industrial, and agricultural sectors by the end of this decade. Renewable energy and natural gas are the two primary alternatives identified, enabling the Kingdom to generate 50 percent of its electricity from renewable sources.

Saudi Arabia is actively promoting the use of environmentally friendly gas through a government-led initiative spearheaded by the National Center for Environmental Compliance. In partnership with local and international organizations, this initiative supports private sector factories in transitioning from production lines that create environmentally harmful products—those detrimental to the ozone layer and contributing to global warming—to more eco-friendly alternatives.

Saudi Aramco, the world’s largest oil producer, is positioning itself as a key player in the liquefied natural gas market. In its first international venture into LNG, the energy giant acquired a minority stake in MidOcean Energy from EIG Global Energy Partners for $500 million last year.

This agreement strengthens the existing partnership between Aramco and EIG, which was part of a consortium that acquired a 49% stake in Aramco Oil Pipelines Co., an Aramco subsidiary, in 2021. MidOcean Energy is currently in the process of acquiring interests in four Australian LNG projects, with a growth strategy focused on creating a diversified global business. This strategic partnership with MidOcean Energy marks Aramco’s first international investment in LNG.


Saudi Arabia intensifies mining tech push in meetings with US firms

Saudi Arabia intensifies mining tech push in meetings with US firms
Updated 14 min 41 sec ago
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Saudi Arabia intensifies mining tech push in meetings with US firms

Saudi Arabia intensifies mining tech push in meetings with US firms

JEDDAH: Saudi Arabia is ramping up its adoption of advanced mining technologies as top minister met with senior executives from the US firms at MINExpo International 2024.  

During his visit to Las Vegas, Minister of Industry and Mineral Resources Bandar bin Ibrahim Alkhorayef held bilateral meetings with these firms to discuss localizing innovative solutions for mining operations and exploring promising investment opportunities in the sector.  

The discussions aimed to bolster the Kingdom’s mining industry and enhance its global competitiveness, the Saudi Press Agency reported. 

The Kingdom aims to establish mining as a foundational industrial pillar, with its mineral wealth estimated at SR9.4 trillion ($2.4 trillion), according to a recent release from the Ministry of Industry and Mineral Resources. 

In addition to mining discussions, the minister explored collaboration with advanced industries, including a visit to JetZero, a California-based aviation company, and a tour of SpaceX, a leader in space exploration technologies. 

In a post on his X account, Alkhorayef said: “During my visit to the US state of California, I was briefed on the advanced technologies possessed by JetZero and SpaceX, the two leading companies in their field, and discussed with them enhancing cooperation in the aviation and space industry sector; in line with the Kingdom’s goals and targets in the National Industrial Strategy.” 

In the mining sector, Alkhorayef, along with his deputy for mining affairs, Khalid bin Saleh Al-Mudaifer, engaged in discussions about potential investments with Michael Wright, CEO of Thiess, a prominent mining services provider with operations across Australia, Asia, and the Americas.  

They evaluated strategic targets outlined in the Kingdom's comprehensive mining strategy and extended an invitation to Thiess to expand its regional footprint in Saudi Arabia. 

Alkhorayef also met Jon Stanton, CEO of Weir Group, to explore opportunities in the valves and pumps sectors, which are experiencing rising demand due to major oil and gas projects.  

The valves sector was valued at $9.8 billion in Saudi Arabia by the end of 2022. The minister emphasized the potential for establishing a local manufacturing facility for pumps and valves to enhance the sector’s capabilities. 

Furthermore, Alkhorayef engaged with Richard Harris and Petri Virrankoski from Sandvik to discuss investments in mining machinery and surface drilling solutions, highlighting Sandvik’s role in advancing operational efficiency through innovative equipment and digital solutions. 

The minister also met with Dave Goddard, head of mining at Hexagon, who outlined Saudi Arabia’s digital transformation across various sectors, including mining.  

Alkhorayef presented initiatives like the Future Factories program, aiming to automate 4,000 facilities, which could facilitate Hexagon’s expansion and address the growing demand for software solutions, including AI applications. 

In discussions with Otto Breitschwerdt, chief technology officer at Caterpillar, Alkhorayef highlighted promising opportunities in heavy equipment and diesel generators amid the Kingdom’s ambitious development plans.  

He noted that the heavy equipment market is projected to exceed $4 billion, while the diesel generator market is expected to reach $550 million by 2030. 

Alkhorayef also met Dan Lankford, chairman of Impossible Metals, to explore the latest solutions in offshore mineral exploration. Impossible Metals is developing underwater robotic vehicles for critical mineral extraction and has successfully tested its autonomous underwater vehicle, Eureka II, in deep waters. 


Oman credit rating rises to ‘BBB-’ from ‘BB+’: S&P

Oman credit rating rises to ‘BBB-’ from ‘BB+’: S&P
Updated 29 September 2024
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Oman credit rating rises to ‘BBB-’ from ‘BB+’: S&P

Oman credit rating rises to ‘BBB-’ from ‘BB+’: S&P

RIYADH: Oman’s continued improvement in public finances has pushed its credit rating to “BBB-” from “BB+,” according to S&P Global Ratings.

The agency raised its long-term foreign and local currency sovereign credit ratings, underlining a stable outlook on the long-term scores and upgrading Oman’s short-term grades to “A-3” from “B.”

The transfer and convertibility assessment was also improved, rising to “BBB” from “BBB-.”

The upgrade reflects a strengthening of Oman’s public finances and the ongoing external deleveraging of state-owned enterprises.

“Following significant deterioration in the balance sheet over 2015-2021, the government has implemented structural reforms that will see it return to a net asset position from this year,” the report stated.

The government has reorganized its government-related entity sector to enhance operational efficiencies and improve financial stability, leading to a reduction in total GRE debt to $33.8 billion, or 30 percent of gross domestic product, as of June, down from a peak of $35.9 billion, or 41 percent of GDP, at the end of 2021.

S&P highlighted that Oman’s fiscal position remains highly dependent on oil price movements, but resilience against such shocks has strengthened through various reform measures.

Authorities have focused on rationalizing expenditure and mobilizing non-hydrocarbon revenue, with upcoming steps including implementing a personal income tax and phasing out energy subsidies.

Furthermore, the government is reducing its direct involvement in the economy, shifting toward a regulatory role by selling assets to develop the non-hydrocarbon private sector and attract foreign direct investment.

The report also underscored Oman’s growing financial buffers. “On the asset side, the government continues to accumulate sizable liquid buffers via its deposits in domestic institutions and the central bank, alongside its sovereign wealth fund — the Oman Investment Authority,” the rating agency stated.

S&P forecasts that Oman will post fiscal surpluses of 1.9 percent of GDP over 2024-2027, assuming Brent crude oil prices average around $80 per barrel during that period. These surpluses would enable Oman to further reduce external debt levels and accumulate liquid assets.

“S&P upgrading Oman’s investment grade rating affirms the country is confidently advancing toward the national goals of achieving fiscal balance and financial sustainability,” the nation’s Minister of Finance, Sultan Al-Habsi, stated, according to a post on the Oman News Agency’s official X account.

Al-Habsi added that this rating enhances confidence in the resilience, growth capacity, and investment appeal of the country’s economy.

The stable outlook from S&P reflects a balance between the potential benefits of the government’s fiscal and economic reform program and the economy’s structural vulnerability to oil price volatility.

S&P suggested that the ratings could be raised over the next two years if ongoing reforms lead to sustained growth in GDP per capita, bolstered by progress in non-oil sector growth and institutional strengthening aimed at economic diversification and domestic capital market development.

S&P also warned that any slowdown in fiscal and economic reforms or adverse external conditions, such as a significant negative shift in trade terms, could lead to budgetary deficits and elevated net debt levels, prompting a potential downgrade of Oman’s credit rating.


Saudi mobility startup Shift leads regional funding activity 

Saudi mobility startup Shift leads regional funding activity 
Updated 29 September 2024
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Saudi mobility startup Shift leads regional funding activity 

Saudi mobility startup Shift leads regional funding activity 
  • In Saudi Arabia, car rental firm Shift raised $82.8 million in an investment led by Merak Capital

RIYADH: Mobility, climate, and tech startups across the Middle East and North Africa have secured significant investments in recent weeks, reflecting the region’s continued growth in innovation. 

In Saudi Arabia, car rental firm Shift raised $82.8 million in an investment led by Merak Capital, making it one of the largest funding rounds in the second half of the year. 

Founded in 2017 by Khalid Al-Sulaiman, the company provides technology-driven mobility solutions for people and products, and currently operates in 57 cities across Saudi Arabia with a fleet of over 12,000 vehicles. 

“We are thrilled to partner with Merak Capital, whose investment validates our innovative approach and commitment to revolutionizing mobility solutions in Saudi Arabia. This partnership will accelerate our growth, allowing us to expand our services and enhance our technology to meet the evolving needs of our customers, particularly within the tourism sector,” Al-Sulaiman said. 

“Together, we are poised to set new standards for efficiency, sustainability, and service excellence, driving toward a future where technology and sustainability create lasting value for our customers, stakeholders, and communities,” he added. 

This fresh capital will support Shift’s growth and innovation, enabling the company to accelerate its intelligent mobility solutions. The funding is expected to enhance SHIFT’s ability to serve its expanding customer base and scale its operations across the Kingdom. 

Merak Capital believes in Shift’s growth potential with the investment firm’s CEO praising the startup’s locale strength. 

“Our belief in the impact of technology on the mobility of people, products, and businesses is profound, and with our position and track record as one of the leading technology investment firms in the region, coupled with the innovation and capabilities of Shift as a mobility pioneer, we believe this partnership will yield tremendous success for all stakeholders, including our partners, investors, and the thriving economy of the Kingdom across multiple sectors, such as tourism, transportation, hospitality, logistics, and more,” Merak Capital CEO, Abdullah Al-Tamami, said. 

Coral closes $3m seed round for carbon management solutions 

UAE-based climate tech startup Coral has secured $3 million in a seed funding round led by a group of investors. 

Founded in 2022 by Juergen Hoebarth and Daniele Sileri, Coral provides businesses with tools to manage and reduce their carbon emissions, promoting transparency and accessibility in achieving carbon neutrality. 

“We’re thrilled to have completed our seed round and are grateful for the support from our investors who share our vision for a sustainable future,” said Daniele Sileri, director of product and strategy at Coral. 

The funding will be used to expand Coral’s team, scale its platform, and further accelerate its mission to make carbon management simpler and more transparent for businesses worldwide. 

Kwiks raises $827k to enhance AI-driven recruitment solutions 

Morocco-based human resources tech company Kwiks has raised $827,000 in funding from Azur Innovation Management. 

Founded in 2013 by Amine Houssaini and Karim Kaoukabi, Kwiks connects companies with freelance headhunters through its platform, streamlining the hiring process. 

The capital injection will boost Kwiks’ recruitment capabilities, allowing the company to further develop its artificial intelligence-driven hiring solutions and improve its platform’s ability to match companies with top talent. 

Userguest secures $2.4m to strengthen hotel revenue optimization tools 

Morocco-based software solutions provider Userguest has closed a $2.4 million seed round led by Al Mada Ventures, with participation from several notable investors, including CDG Invest, Saviu Ventures, and UM6P Ventures. 

Founded in 2018 by Ahmed Chami, Assil Bernossi, and Hicham Benyebdri, Userguest enables hotels to optimize direct revenue by delivering personalized messages and intelligent incentives to website visitors. 

“This investment underscores our investors’ confidence in our vision to create an automated tool that optimizes conversions and revenue for hotels. Having solidified our market presence and earned the trust of leading hotel brands, we are now ready to elevate Userguest to new heights, enhancing hotel performance while enriching the user experience, benefiting both hoteliers and travelers alike,” said Benyebdri. 

The new funding will primarily be allocated to expanding the company’s sales team, enhancing its market reach, and solidifying its position as a leader in hotel revenue optimization. 

EBRD commits $3m to Ibtikar Fund II to support Palestinian startups 

The European Bank for Reconstruction and Development has invested $3 million in Ibtikar Fund II, which closed with $25 million in total commitments, surpassing its initial target of $15 million. 

The fund aims to invest in up to 25 early-stage Palestinian tech startups, promoting digitalization and job creation across the region. 

The investment reflects increasing support for tech-driven initiatives in Palestine, with a focus on fostering local innovation and growth in the digital economy. 

Amplify Growth Fund launches $100m debt fund targeting MENA region 

UAE-based Amplify Growth Partnership has launched a $100 million debt fund, with its first transaction already closed in a Saudi fintech company. Further details about the investment were not disclosed. 

Amplify Growth Fund I will focus on deploying capital in technology companies across the Middle East, North Africa, and Türkiye, supporting their growth needs. 

With the rise of venture debt in the region — which reached $757 million in 2023, a 262 percent year-on-year increase — this fund aims to meet the increasing demand for debt capital. 

Sharaf Sharaf, head of the fund, said: “The Amplify Growth Fund is poised to meet the region’s growing demand for debt capital in the venture and SME sectors, which are areas that have been historically underserved.” 

It has partnered with Dubai’s Ajeej Capital and Nuwa Capital to manage investments. 

Padash raises $125k in pre-seed funding for q-commerce expansion in Iraq 

Iraq-based quick commerce startup Padash has raised $125,000 in a pre-seed round from an undisclosed angel investor. 

Founded in 2023 by Ahmed Jamal, Omer Sabah, Muhammed Yassein, and Ahmed Bayiz, Padash offers instant food and grocery delivery services in Irbil, Kurdistan. 

The new capital will be used to expand Padash’s operations within the city, and further develop its mobile app, positioning the company to grow its footprint in Iraq’s fast-growing q-commerce sector.


From cash to clicks: Saudi Arabia’s e-payments revolution

From cash to clicks: Saudi Arabia’s e-payments revolution
Updated 29 September 2024
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From cash to clicks: Saudi Arabia’s e-payments revolution

From cash to clicks: Saudi Arabia’s e-payments revolution

RIYADH: Imagine a bustling Riyadh souk where every transaction is just a tap away — no more searching for loose change or waiting for cashiers. In Saudi Arabia, this digital dream is becoming a reality as the Kingdom experiences a high-tech makeover of its financial landscape.

With smartphones buzzing and government-backed innovations steering the way, the shift from traditional cash to sleek digital payments is transforming the way Saudis shop, bank, and spend.

This evolution reflects a broader trend within the region and underscores Saudi Arabia’s commitment to embracing technological advancements as part of its Vision 2030 initiative.

The rise of e-payments in the Kingdom is driven by several factors, including increasing smartphone usage, supportive government policies, and changing consumer preferences.

A vision for digital transformation

At the heart of Saudi Arabia’s e-payment revolution is the Vision 2030 initiative, which seeks to boost non-cash transactions to 80 percent by 2030.

This ambitious goal is not just a numerical target but a strategic move to foster financial inclusion and digital innovation.

“The consistent growth of e-payments and financial technology within the Saudi retail sector has been impressive, especially over the past few years,” Tariq bin Hendi, senior partner at Global Ventures told Arab News.

He added that Vision 2030 has “played a major role in this transformation,” particularly with its emphasis on digitalization and financial inclusion. 

“This approach has created a strong environment for innovation, allowing local, regional and international fintech players to thrive,” said Bin Hendi.

He also noted that proactive government policies that support digital transactions, along with strategic partnerships among banks, fintech companies, and retailers that enhance payment systems, have helped drive the transformation, as well as substantial investments in cybersecurity to protect against fraud.

Additionally, the development of innovative payment solutions and a consumer base increasingly favoring digital methods have helped drive the commerce shift, creating a dynamic and secure environment for e-payments to flourish.

Smartphone penetration: A game changer

One of the most significant drivers of this digital payment surge is the proliferation of smartphones.

“With smartphone adoption reaching over 90 percent of the population, it is safe to say the increasing penetration of mobile phones in Saudi Arabia has played an integral role in the exponential growth of e-payments,” Bin Hendi said.

This means that smartphones have become the main tool people use to carry out digital financial transactions, such as making payments or managing their finances online.

Abdulrahman Al-Dakheel, CEO of online fintech platform Taskheer, echoed this view, telling Arab News: “The high penetration of smartphones in Saudi Arabia has been a critical enabler for the growth of e-payments. With the majority of the population owning smartphones, there’s been a natural shift toward mobile-based transactions.” 

He added: “Advancements in mobile technology, such as Near Field Communication and biometric authentication, have enhanced the security and convenience of mobile payments, making them more attractive to consumers.”

Al-Dakheel further explained that the creation of mobile wallets and apps that work smoothly with banking services has made it easier for people to make digital payments.

This convenience is especially popular among younger, tech-savvy individuals who value the flexibility and simplicity of using their smartphones for routine financial transactions.

Role of international partnerships

International collaborations are also crucial for the advancement of Saudi Arabia’s e-payment infrastructure. Partnerships with global fintech leaders and regulatory bodies facilitate the exchange of knowledge and technology, accelerating local development.

“International partnerships and collaborations are key. Alliances with global leaders in the fintech space and international regulatory bodies help facilitate an exchange of knowledge and technology — thus accelerating the development of local capabilities,” Global Ventures’ Bin Hendi said.

He added: “Insight into global best practice can help the Kingdom build the next phase of growth into a more robust, innovative and secure e-payment environment.”

By adopting global best practices and tapping into the expertise of established international fintech companies, Saudi Arabia can speed up the development and implementation of advanced payment technologies.

“For example, partnerships with leading fintech companies from regions like Europe, known for their mature digital payment ecosystems, could provide valuable insights into implementing advanced solutions such as open banking and real-time payments,” Al-Dakheel said.

He continued: “Additionally, collaboration with countries that have successfully transitioned to cashless societies, like Sweden or Singapore, could offer models for regulatory frameworks and consumer education initiatives that Saudi Arabia can adapt to its local context.”

These partnerships help not only in advancing technology but also in creating a culture of innovation necessary for the growth of e-payments.

What happens next?

Looking ahead, the trajectory of e-payments in Saudi Arabia appears poised for continued growth.

When asked how he envisions the future trajectory of e-payments in Saudi Arabia’s retail sector, Bin Hendi underlined that given the current rapid growth in electronic payments, it is expected that they will increasingly dominate retail transactions in the future.

“If current trends persist, we could see e-payments accounting for up to 85-90 percent of all retail transactions within the next five years,” Al-Dakheel said.

He added: “This growth will likely be driven by continued investments in fintech innovation, broader merchant acceptance, and ongoing government support for cashless transactions.”

Al-Dakheel went on to say that as consumers become more accustomed to the convenience and security of e-payments, the demand for digital solutions will only increase, further accelerating this shift.

“Given that e-payments currently account for 70 percent of all retail transactions in Saudi Arabia, I only expect it to continue to grow — especially given the increase in mobile use and digital literacy among a young population,” Bin Hendi said.

He added: “Driven by consumer demand, convenience, and continuing advancements in mobile technology, I also envision more growth in the use of digital wallets and contactless payment methods.”

Bin Hendi also highlighted that in 2023, 10.8 billion electronic transactions were recorded, compared to 8.7 billion in 2022, emphasizing the positive trend of e-payments.

Saudi Arabia’s e-payment revolution is a testament to the country’s dynamic approach to financial modernization.

Driven by government initiatives, technological advancements, and a supportive regulatory environment, the shift from cash to digital transactions is not just a trend but a fundamental transformation.

As the Kingdom progresses toward its Vision 2030 goals, the e-payment sector is set to play a pivotal role in shaping the future of financial transactions in Saudi Arabia.


Lebanon’s economy to contract amid ongoing armed conflict, as region faces challenging 2024: EBRD

Lebanon’s economy to contract amid ongoing armed conflict, as region faces challenging 2024: EBRD
Updated 29 September 2024
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Lebanon’s economy to contract amid ongoing armed conflict, as region faces challenging 2024: EBRD

Lebanon’s economy to contract amid ongoing armed conflict, as region faces challenging 2024: EBRD
  • Inflation, which had soared to a peak of 352 percent in March 2023, decreased to 35.4 percent by July 2024
  • Nonetheless, unemployment remains high, with over a third of the workforce without a job

RIYADH: Lebanon’s economy is projected to contract by 1 percent in 2024 under the severe weight of armed conflict and a deepening political and economic crisis, though a return to growth remains possible.

The European Bank for Reconstruction and Development’s latest Regional Economic Prospects report highlighted that these factors have created an environment of extreme instability, further undermining gross domestic product growth prospects due to stalled reforms and the lack of progress on an International Monetary Fund program.

Inflation, which had soared to a peak of 352 percent in March 2023, decreased to 35.4 percent by July 2024. Nonetheless, unemployment remains high, with over a third of the workforce without a job, highlighting the dire socio-economic conditions. 

The EBRD report noted that a return to modest growth is possible, saying: “Growth could return to a forecast 2 percent in 2025, provided regional tensions subside with some progress on reforms and an IMF program in place.”

The adoption of the 2024 budget law, aligning the exchange rate closer to market rates, has provided some stabilization, but Lebanon’s economy remains vulnerable.

Regional outlook for 2024 and beyond

Economic growth in the Southern and Eastern Mediterranean region is set to face a challenging year in 2024, with countries contending with the impacts of conflict, slowing investments, and climate-related disruptions, according to the report.

Growth is forecast at 2.1 percent for the first half of the year, rising modestly to 2.8 percent for the full year. This marks a downward revision from earlier estimates, driven primarily by slower-than-anticipated investment recovery in Egypt and the ongoing conflicts in Gaza and Lebanon.

The outlook, however, remains uncertain and depends on several factors, including the resolution of ongoing conflicts, a rebound in private and public investments, and effective responses to climate challenges. 

Severe droughts in Morocco and Tunisia, alongside energy sector disruptions in Egypt, continue to pose significant risks to the region’s growth potential.

The report underscores the urgent need for continued reforms and stabilization efforts across the SEMED region to ensure sustained economic growth in the coming years.

Egypt: Slow recovery amid energy sector disruptions

Egypt, one of the region’s largest economies, is expected to have grown by 2.7 percent in the fiscal year that ended in June, rising to 4 percent in 2024-25 as the country continues its recovery from a prolonged period of economic strain.

On a calendar-year basis, growth is forecast at 3.2 percent in 2024 and 4.5 percent in 2025, marking a steady return to pre-crisis levels, according to the EBRD.

The recovery is being bolstered by expansions in sectors such as retail, wholesale trade, agriculture, communications, and real estate. 

However, the energy sector continues to face disruptions, and inflation, while moderating, remains a challenge at 25.7 percent as of July, down from its peak of 38 percent in September 2023.

“The budget deficit stood at 3.6 percent of GDP in FY24 (fiscal year ending June) and the debt-to-GDP ratio is expected to fall to 83 percent in FY25,” the report said.

Egypt’s external accounts have recovered since the devaluation of its currency in March, with foreign exchange reserves reaching a five-year high. 

Financial inflows from international partners and investors have also provided critical support. However, risks remain, particularly with continued disruptions in energy supply and delays in structural reforms under the IMF program.

Jordan: War in Gaza weighs on economic prospects

Jordan’s economy is forecast to grow at a slower rate of 2.2 percent in 2024, with the ongoing Gaza conflict having a pronounced impact on its tourism sector and investment flows. 

The conflict has increased uncertainty among consumers, who are now holding back on large expenditures, further dampening growth. 

The EBRD said a modest recovery to 2.6 percent growth is possible by 2025, contingent on an easing of geopolitical tensions and continued progress on economic reforms.

“Jordan’s heavy reliance on imports makes it vulnerable to geopolitical instability in the region, as well as to shocks in energy and food prices and disruptions in global supply chains,” the report explained.

The country’s inflation remains moderate, standing at 1.9 percent in July, but unemployment remains persistently high at 21.4 percent, with significantly higher rates for women – 34.7 percent – and the youth population at 43.7 percent. 

The Central Bank of Jordan has maintained a stable policy interest rate, following the lead of the US Federal Reserve, as part of its efforts to preserve the currency peg.

Morocco: Agricultural struggles amid drought, tourism recovery

Morocco is grappling with severe drought, which is affecting its agricultural output — a key driver of the country’s economy. 

Growth is expected to reach 2.9 percent in 2024, with a rise to 3.6 percent in 2025, driven by a recovery in the manufacturing and tourism sectors, the EBRD forecasts.

The easing of inflation, which fell to 1.3 percent in July, has provided some relief, while exports and domestic demand continue to support economic activity. 

Morocco’s government has embarked on fiscal consolidation measures, reducing the budget deficit to 4.3 percent of GDP in 2023. The outlook for 2025 is more positive, provided that weather conditions improve and agricultural output recovers.

Downside risks remain for Morocco due to its dependence on energy imports and the vulnerabilities posed by climate change. 

Severe droughts are expected to weigh on growth in the short term, but the country’s recovery in tourism, remittances, and exports of automobiles and electric products should help sustain moderate growth.

Turkiye’s economic shift toward orthodoxy

In 2023, Turkiye reverted to more conventional economic policies, tightening monetary and fiscal measures to combat inflation. 

The Central Bank raised the policy rate by 4,150 basis points, holding it at 50 percent, while the Treasury’s efficiency package aimed to reduce the fiscal deficit, excluding earthquake-related expenses. 

The decision to forgo a mid-year minimum wage hike in July helped stabilize inflation expectations. 

Investor confidence improved with Turkiye’s removal from the Financial Action Task Force grey list, as indicated by a drop in credit default swap premiums and upgrades in sovereign ratings. The current account deficit shrank to $19.1 billion in July, while foreign exchange reserves increased to $147.9 billion. 

The economy grew by 3.8 percent in the first half of 2024, down from 4.6 percent a year earlier, with private consumption still leading growth despite a slowdown in manufacturing. 

Annual inflation fell to 52 percent in August from a peak of 75.4 percent in May, necessitating continued tight monetary policy to meet the revised inflation target of 41.5 percent by year-end. 

Economic growth is forecasted to decline to 2.7 percent in 2024, amid risks from high inflation and geopolitical tensions.

Tunisia: Modest growth but ongoing fiscal struggles

Tunisia’s economy is expected to post modest growth of 1.2 percent in 2024, rising slightly to 1.8 percent in 2025. 

While inflation has decreased to a 30-month low of 7 percent as of July, the country continues to face significant economic challenges. These include a large external debt burden, limited fiscal space, and vulnerability to external shocks, according to the report.

Despite contractions in agriculture and mining, Tunisia has experienced growth in tourism, financial services, and other industrial sectors, providing some support to the economy.

Tunisia’s fiscal struggles have been partially alleviated by an improvement in the current account deficit and higher tax revenues. 

However, the country’s reliance on external funding and its slow progress on IMF-supported programs continue to pose significant risks to its economic stability.