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Saudi Arabia is shifting gears and racing into the EV future

Saudi Arabia is shifting gears and racing into the EV future
Saudi Arabia is focused on creating a comprehensive EV ecosystem, and the government is aiming for 30 percent of vehicles in Riyadh to be electrified by 2030. (AFP)
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Updated 16 March 2025
Nadin Hassan
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Saudi Arabia is shifting gears and racing into the EV future

Saudi Arabia is shifting gears and racing into the EV future
  • Kingdom is making a strategic play to lead the global automotive revolution under its ambitious Vision 2030
Updated 16 March 2025
Nadin Hassan
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RIYADH: Long known for its oil industry, Saudi Arabia is now racing toward an electrified future, not just for sustainability reasons, but also to get ahead in this trillion-dollar market.

With billions of dollars being poured into infrastructure, cutting-edge technology and supply chain localization, the Kingdom is making a strategic play to lead the global automotive revolution under its ambitious Vision 2030 road map.

Saudi Arabia is focused on creating a comprehensive EV ecosystem, and the government is aiming for 30 percent of vehicles in Riyadh to be electrified by 2030.

This strategy has seen the Kingdom invest in US-based EV manufacturer Lucid through its Public Investment Fund, as well as creating its homegrown electric vehicle brand, Ceer — set to launch its first models in 2026.

Big bets and bold moves: Saudi Arabia’s investment in EVs

Saudi Arabia’s commitment to economic diversification is evident in its substantial investments in EV production and battery supply chains.

Heiko Seitz, PwC Global and Middle East eMobility leader, told Arab News that the Kingdom is prioritizing the development of a self-sufficient automotive supply chain as a key strategy to solidify its position in the global EV industry.

He added: “Through significant investments, such as $3.4 billion in Lucid Motors to produce 155,000 EVs annually and a $5.6 billion agreement with Human Horizons, the Kingdom is attracting global automakers and building a competitive manufacturing base.”

Seitz highlighted the $9 billion allocated to EV-related materials, including $900 million from EV Metals and $126 million from Ivanhoe Electric, as evidence that the Kingdom is leveraging its $2.5 trillion in untapped mineral reserves to ensure it has access to the critical resources needed for production.

Mazin Jameel, managing director of marketing operations at Abdul Latif Jameel Motors, told Arab News that Saudi Arabia is taking a comprehensive approach to boosting EV adoption by developing a widespread charging network through public and private partnerships with leading technology providers.

“These investments in charging infrastructure are complemented by large-scale renewable energy projects, including solar and wind farms, which will provide clean energy for EV charging,” said Jameel.

He added: “Additionally, the government is introducing regulatory frameworks, financial incentives and policy support to accelerate EV adoption among consumers. These steps reflect Saudi Arabia’s comprehensive approach to fostering a sustainable and future-ready transportation ecosystem.”

The Kingdom is already working on integrating artificial intelligence and automation into the automotive sector, ensuring a more efficient production process.

As part of these efforts, Saudi Arabia is fostering partnerships with global tech firms to enhance the digital infrastructure required for smart mobility solutions.

The integration of AI-driven analytics in EV production will help in optimizing supply chain management and improving vehicle efficiency, positioning Saudi Arabia at the forefront of next-generation mobility innovation.

EVs, fast chargers and a high-tech future

Saudi Arabia is not solely relying on the government to propel the EV industry forward. It is keen to work with the private sector to ensure the sector has solid foundations to blossom.

Ahmad Al-Tawbah, CEO of Motory, told Arab News that private sector expertise in technology and operations is being complemented by public investment in infrastructure, policies and incentives. 

Through significant investments, the Kingdom is attracting global automakers and building a competitive manufacturing base.

Heiko Seitz, PwC Global and Middle East eMobility leader

“In Saudi Arabia, initiatives like the establishment of advanced manufacturing zones, such as NEOM and KAEC, showcase how PPPs can create a thriving ecosystem for automotive assembly, EV production and battery manufacturing,” he said.

Al-Tawbah added that PPPs are crucial in reshaping the supply chain ecosystem.

“They encourage local suppliers to integrate into the global automotive value chain, fostering the growth of local industries, such as component manufacturing and logistics,” he added.

By focusing on localized production, these partnerships help decrease reliance on imports while strengthening Saudi Arabia’s role in regional supply chains. This approach not only satisfies domestic demand, but also enhances the Kingdom’s position as a key export hub for the Middle East and beyond.

Powering jobs and turbocharging the economy

Saudi Arabia’s booming EV sector is not just about seeing cars on the road; it also has the potential to deliver tens of thousands of jobs in engineering, manufacturing, logistics and software development — directly supporting Vision 2030’s objective of increasing employment.

Abdul Latif Jameel Motors’ Jameel said: “Additionally, the automotive ecosystem will provide opportunities for local entrepreneurs and small businesses to participate in the supply chain at all levels of manufacturing, distribution and related logistics, contributing to economic growth and innovation within the sector.”

Ceer Motors, the first Saudi automotive brand, is projected to create 30,000 jobs by 2034, contributing about $8 billion to gross domestic product.

“The Kingdom is investing heavily in workforce upskilling, with over 600,000 Saudis set to benefit from education and training programs,” Seitz said.

Additionally, Saudi Arabia is collaborating with leading universities and research institutions to develop specialized programs in EV technology, battery science and smart mobility solutions.

These initiatives are designed to equip the local workforce with the expertise needed to drive innovation in the automotive sector and position Saudi talent at the heart of future developments.

Luring big players and powering up local brands

As part of its focus on the industry, Saudi Arabia is rolling out the red carpet for global automakers while giving homegrown brands a serious boost.

With enticing financial perks and smart policies, the Kingdom is making it hard for car giants to say no. “Programs like the $2.6 billion Standard Incentives Program provide funding of up to 35 percent of project investments — capped at SR50 million ($13.33 million) per project. Additionally, Lucid Motors received $3.4 billion in financing over 15 years to establish a plant targeting 155,000 EVs annually,” Seitz said. 

These steps reflect Saudi Arabia’s comprehensive approach to fostering a sustainable and future-ready transportation ecosystem.

Mazin Jameel, managing director of marketing operations at Abdul Latif Jameel Motors

He added: “The PIF has also invested $1 billion in Lucid and is backing Ceer Motors. These financial incentives, coupled with regulatory frameworks such as industrial licensing and quality standards certification, create a supportive ecosystem for both international and local manufacturers.”

The Kingdom’s automotive strategy extends beyond production to include research and development in next-generation mobility solutions.

“We’ve teamed up with KAUST and Toyota to push hydrogen fuel research forward, launching Saudi Arabia’s first hydrogen-powered taxi pilot with the Toyota Mirai — big steps toward a cleaner, high-tech transport future,” Jameel said.

Competing on the global stage and challenges

Saudi Arabia is not just joining the global electric vehicle race; it is aiming for pole position. With massive investments, a prime geographic location and a strategy that blends innovation with economic muscle, the Kingdom is shifting gears fast.

“Coupled with the Kingdom’s geographic advantage as a gateway to Asia, Europe and Africa, these efforts are positioning Saudi Arabia as a key export hub for the automotive sector,” Seitz said.

Scaling up Saudi Arabia’s automotive sector also has its own hurdles, but the Kingdom has a game plan.

“To address the lack of a local supply chain, incentives are attracting global suppliers and fostering component manufacturing. Workforce development is a priority, with programs like NAVA training over 600,000 citizens in advanced automotive technologies,” said Seitz.

Another crucial piece of the puzzle, infrastructure expansion, is being “rapidly developed,” Seitz said, highlighting plans to install 5,000 EV fast chargers by 2030 through the Electric Vehicle Infrastructure Co. — a joint-venture company between the PIF and Saudi Electricity Co.

Regulatory frameworks are also being aligned with international standards, while purchase incentives and awareness campaigns are encouraging more drivers to go electric.

Seitz said that investment in Lucid alongside partnerships with global players like Foxconn and Hyundai show that Saudi Arabia is overcoming challenges to solidify its position as a “global automotive powerhouse under Vision 2030.”

Topics: Saudi Arabia Electric Vehicle

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Closing Bell: Saudi main index slips to close at 11,882.65

Closing Bell: Saudi main index slips to close at 11,882.65
Updated 03 April 2025
Reem Walid
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Closing Bell: Saudi main index slips to close at 11,882.65

Closing Bell: Saudi main index slips to close at 11,882.65
Updated 03 April 2025
Reem Walid

RIYADH: Saudi Arabia’s Tadawul All Share Index slipped on Thursday, losing 142.40 points, or 1.18 percent, to close at 11,882.65.

The total trading turnover of the benchmark index was SR5.53 billion ($1.47 billion), as 58 stocks advanced and 184 retreated.

Similarly, the Kingdom’s parallel market Nomu lost 445.6 points, or 1.43 percent, to close at 30,640.93. This came as 27 listed stocks advanced while 67 retreated.

The MSCI Tadawul Index lost 20.19 points, or 1.32 percent, to close at 1,504.15.

The best-performing stock of the day was Fitaihi Holding Group, whose share price surged 9.65 percent to SR4.43.

Other top performers included Zamil Industrial Investment Co., whose share price rose 6.57 percent to SR38.85, as well as Mobile Telecommunication Co. Saudi Arabia, whose share price surged 4.97 percent to SR11.82.

Tabuk Agricultural Development Co. recorded the most significant drop, falling 8.58 percent to SR12.36.

Arabian Co. for Agricultural and Industrial Investment also saw its stock price fall 7.59 percent to SR53.60.

Raydan Food Co. also saw its stock price decline 7.44 percent to SR19.16.

Horizon Food Co. has announced the board resolution to transfer from Nomu to the main market and appoint Al-Istithmar Capital as a financial adviser for the transition. According to a Tadawul statement, the transfer is contingent upon approval from the Capital Market Authority in accordance with listing regulations and is subject to meeting all requirements set by the Saudi Exchange.

Horizon Food Co. ended the session at SR40, up 2.56 percent.

Emaar, The Economic City seeks to convert SR4.12 billion worth of debt owed to the Public Investment Fund into capital. 

The proposed debt conversion is one component of the company’s capital optimization plan announced in September, designed to stabilize the entity’s financial and operational positions as well as optimize its capital structure to boost its ability to move forward with its growth plans.

Emaar, The Economic City ended the session at SR14.44, down 0.28 percent.

The Saudi Stock Exchange has announced the suspension of trading in the shares of seven listed companies for one session on Thursday due to the firms’ failure to disclose their annual financial statements ending Dec. 31 within the statutory period specified in the Securities Offerings and Continuing Obligations Rules issued by the CMA Board.

From the main market, the firms include Saudi Industrial Development Co., Development Works Food Co., and National Gypsum Co., as well as Arabian Contracting Services Co. and Al Jouf Cement Co.

From the parallel market, the companies are Keir International Co. and Knowledge Net Co. 

Topics: Closing Bell Saudi Stock Exchange (Tadawul)

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US Tariffs: Trump imposes 10% levies on GCC countries; Syria, Iraq hit hard 

US Tariffs: Trump imposes 10% levies on GCC countries; Syria, Iraq hit hard 
Updated 03 April 2025
Dayan Abou Tine 
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US Tariffs: Trump imposes 10% levies on GCC countries; Syria, Iraq hit hard 

US Tariffs: Trump imposes 10% levies on GCC countries; Syria, Iraq hit hard 
  • Egypt, Morocco, Lebanon, and Sudan received same 10 percent baseline as GCC
  • Concerns raised that even baseline tariff could have ripple effects across GCC supply chains
Updated 03 April 2025
Dayan Abou Tine 

RIYADH: Gulf Cooperation Council nations will face a 10 percent US tariff under Donald Trump’s new trade policy, aimed at addressing what he called long-standing unfair practices. 

While the GCC was spared the steepest penalties, other Arab nations were hit harder — with Syria and Iraq facing tariffs of 41 percent and 39 percent, respectively, followed by Libya at 31 percent, Algeria at 30 percent, Tunisia at 28 percent, and Jordan at 20 percent. 

Egypt, Morocco, Lebanon, and Sudan received the same 10 percent baseline as the GCC, reflecting their relatively stable trade ties with the US, particularly in oil and petrochemical exports.

Hamza Dweik, head of trading at Saxo Bank, told Arab News: “Non-energy sectors in the GCC that are most vulnerable to the new tariffs include electronics, automobiles, construction, retail, and consumer goods.”

He added: “These industries rely heavily on imported goods, and the increased costs from tariffs could lead to higher prices for consumers and reduced competitiveness in the market.”

Dweik also cautioned that the region’s financial services sector may face challenges, as heightened global uncertainty could disrupt investment flows and impact regional financial markets.

Concerns have been raised that even a baseline tariff could have ripple effects across GCC supply chains, especially in metals, chemicals, and industrial sectors. 

Dweik said that global retaliation or trade spillovers are a possibility and could indirectly affect the Gulf economies.

“The uncertainty in policy and potential for rapid changes weigh heavily on global markets, including those in the GCC. The region’s focus should be on diversifying trade relationships and strengthening ties with unaffected regions to mitigate potential losses,” he added.

Oil exempt from tariffs 

In a notable relief for Gulf exporters, the White House has confirmed that oil and gas imports will be exempt from the new tariffs. The decision — which also applies to energy imports from Canada, Mexico, and Europe — is intended to avoid disrupting US energy markets and driving up fuel prices. 

For the GCC, this exemption protects the region’s most critical export sector, as oil and gas account for over 60 percent of Saudi Arabia’s exports to the US and remain a key pillar of Gulf-US trade. 

“Given the GCC’s reliance on oil exports, any global economic slowdown caused by trade tensions has the potential to negatively impact oil prices, putting extra strain on their economies,” said Dweik, adding: “The exemption helps mitigate some of these impacts, ensuring that the primary revenue stream for these countries remains relatively stable despite the broader trade disruptions.” 

Tariffs have long been a cornerstone of Donald Trump’s economic strategy, rooted in his “America First” agenda to protect domestic industries and reduce trade deficits. 

The president reignited this approach with sweeping new import duties, arguing that unfair trade practices have disadvantaged US workers for decades. 

Countries hit hardest by the tariff hikes — including China, the EU, Australia, and Japan — have sharply criticized the move, with several already imposing retaliatory duties on US goods. The sweeping measures have raised alarms globally, fueling concerns over rising protectionism, supply chain disruptions, and the risk of a broader trade war. 

While the GCC countries are not among the hardest hit, analysts have warned that the region’s exporters may still face rising costs, supply chain disruptions, and increased trade friction — particularly in sectors such as aluminum, petrochemicals, and industrial goods. 

GCC indirect risk from US tariffs 

According to a February analysis by S&P Global Market Intelligence, countries including Saudi Arabia and the UAE — which maintain fixed exchange rates to the US dollar — are particularly vulnerable to tighter monetary conditions, as the US Federal Reserve may keep interest rates elevated to contain inflationary pressures stemming from trade disruptions. 

A stronger dollar could erode export competitiveness and weaken trade balances in these pegged economies. The report warns that sustained high US interest rates could also reduce portfolio inflows into emerging market debt, potentially triggering capital outflows and liquidity pressures — particularly in debt-stressed countries such as Egypt and Tunisia. 

Although Egypt’s position has improved through Gulf investments and an International Monetary Fund program, a prolonged US rate tightening cycle could undermine this recovery. 

Moreover, if oil prices fall amid global economic slowdowns, GCC oil exporters may be compelled to delay infrastructure spending, putting pressure on large-scale diversification programs.

Shipping giant Maersk has warned of the global ripple effects of the new US tariffs, cautioning that escalating trade tensions could disrupt supply chains and raise shipping costs worldwide. 

For the GCC region, which relies heavily on maritime trade for both oil and non-oil exports, such disruptions pose a notable risk. While Gulf oil exports to the US remain exempt, sectors like aluminum, petrochemicals, and industrial goods could be indirectly impacted by slower global demand and rising freight costs. 

Dweik noted that the GCC could potentially benefit from shifting global trade patterns — particularly if US tariffs remain focused on competitors in other regions.

Reaction of GCC equity market 

Regional equity markets in the GCC largely declined following the tariffs announcement, according to data from Bloomberg. 

Saudi Arabia’s main index, the Tadawul All-Share Index, fell by 72.78 points or 0.61 percent, while the parallel Nomu market dropped 0.77 percent at 12:20 p.m. Saudi time. The UAE saw the steepest declines, with the Abu Dhabi index sliding 2.86 percent and Dubai’s DFM index dropping 2.64 percent. 

Oman’s Muscat Stock Exchange MSX 30 Index lost 0.76 percent, Bahrain Bourse All Share Index fell 0.50 percent, and Jordan’s Amman Stock Exchange General Index declined by 1.70 percent. 

In contrast, Qatar emerged as an outlier, with all major indices showing positive movement. The Qatar Stock Exchange gained 0.46 percent, possibly reflecting investor confidence in the country’s diversified economic positioning and lower direct exposure to US trade policy risks. 

While oil exports from the region remain exempt from the new tariffs, market sentiment appears to have been weighed down by concerns over indirect impacts on key sectors such as metals, manufacturing, and industrial goods. The reaction underscores growing investor sensitivity to escalating global trade tensions and their potential spillover effects on regional economies. 

GCC actions to mitigate US tariff risks 

Although the latest US tariffs primarily target China, Mexico, and Canada, GCC exporters cannot afford to remain passive. With the US explicitly tying its trade policy to national security and reviewing all global trade deals under a “Fair and Reciprocal Plan,” Gulf-based businesses face increased exposure. 

According to PwC’s March trade advisory report, newly announced tariffs on aluminum and steel will apply across all countries — including the UAE, Bahrain, and Oman — overriding existing free trade agreements. The report also warns that duty drawbacks will no longer apply to these commodities, raising costs for GCC exporters and affecting competitiveness in the US market. 

PwC recommended that GCC companies urgently evaluate their exposure by modeling cost impacts, revisiting trade classifications, and leveraging tools like free trade zones and customs optimization strategies. 

Businesses should also strengthen trade compliance, invest in digital supply chain solutions, and explore market diversification to reduce US dependency. 

As the global trade environment shifts toward more protectionist policies, the report concludes that a “wait-and-see” approach is no longer viable for the region. 

Topics: US tariffs Donald Trump's tariff

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OPEC+ to advance oil output hike plan, oil drops 

OPEC+ to advance oil output hike plan, oil drops 
Updated 03 April 2025
Reuters
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OPEC+ to advance oil output hike plan, oil drops 

OPEC+ to advance oil output hike plan, oil drops 
Updated 03 April 2025
Reuters

LONDON/MOSCOW: Eight OPEC+ countries agreed on Thursday to advance their plan for oil output hikes by increasing oil output by 411,000 barrels per day in May, prompting oil prices to extend earlier losses. 

“This comprises the increment originally planned for May in addition to two monthly increments,” OPEC said in a statement. 

Oil, which was already down over 4 percent on US President Donald Trump’s announcement of tariffs on trading partners, extended declines after the OPEC statement, with Brent crude dropping over 5 percent toward $71 a barrel.  

Topics: OPEC Oil energy

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Saudi drilling firm ADES enters Brazil with $85.1m charter agreement

Saudi drilling firm ADES enters Brazil with $85.1m charter agreement
Updated 03 April 2025
Nour El-Shaeri
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Saudi drilling firm ADES enters Brazil with $85.1m charter agreement

Saudi drilling firm ADES enters Brazil with $85.1m charter agreement
Updated 03 April 2025
Nour El-Shaeri

RIYADH: Saudi exploration service provider ADES Holding Co. has entered the Brazilian market through an $85.1 million charter agreement.

The deal, which was made with Luxembourg’s Constellation Oil Services Holding, will use ADES’ jackup rig, Admarine 511, to support a drilling contract with Petrobras, Brazil’s state-owned energy giant.

The agreement marks a significant expansion of ADES’ Latin American operations and underscores the company’s strategy of entering new markets through alternative contracting models.

The charter, which has a duration of about 38 months, includes an optional 472-day extension that could bring the total contract term to 4.5 years. 

The Admarine 511 rig is currently undergoing preparations at the Arab Shipbuilding and Repair Yard in Bahrain ahead of deployment, with drilling operations in Brazil expected to commence in the fourth quarter of 2025.

CEO of ADES, Mohamed Farouk, commented on the new agreement, saying: “We are excited to enter the Brazilian market through this strategic Charter with Constellation to support Petrobras, Brazil’s national oil company.” 

Farouk added: “This agreement not only expands our global footprint but also enhances our business sustainability with a long-term contract that strengthens our backlog and provides extended cash flow visibility.”

The company estimates the additional backlog from the charter to be SR319 million ($85.1 million), including mobilization and demobilization fees.

ADES noted that while Constellation will operate the rig locally, the charter structure ensures that a majority of the revenue generated will contribute directly to ADES’ profitability.

Listed on the Saudi stock market, ADES saw a 1.23 percent drop in its share price to SR16.12 as of 12:30 p.m. Saudi time.

The deal comes on the back of strong financial performance by ADES Holding in 2024, reflecting the group’s continued growth trajectory. 

The firm recorded an 80.54 percent increase in net profit, reaching SR816.19 million, up from SR452.07 million in 2023. 

Revenues also surged by 43.10 percent year-on-year to SR6.19 billion, compared to SR4.33 billion the previous year.

Earnings per share rose to SR0.73 in 2024, up from SR0.59 in 2023, underscoring improved profitability and operational efficiency.

Farouk further stated that the firm selected the charter model to navigate Brazil’s operational landscape more effectively. 

“Recognizing the unique challenges of each market, ADES strategically opted for a Charter model that facilitates a seamless entry into Brazil while maximizing profitability and delivering higher returns for our shareholders,” Farouk added.

Topics: ADES Holding Co. Petrobras

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Egypt’s non-oil sector sees minor setback in March, Lebanon’s PMI declines: S&P Global 

Egypt’s non-oil sector sees minor setback in March, Lebanon’s PMI declines: S&P Global 
Updated 03 April 2025
Nirmal Narayanan
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Egypt’s non-oil sector sees minor setback in March, Lebanon’s PMI declines: S&P Global 

Egypt’s non-oil sector sees minor setback in March, Lebanon’s PMI declines: S&P Global 
Updated 03 April 2025
Nirmal Narayanan

RIYADH: Egypt’s non-oil private sector saw a slight decline in business conditions in March, with the country’s Purchasing Managers’ Index easing to 49.2 from 50.1 in February, according to S&P Global. 

In Lebanon, the PMI slipped to a five-month low of 47.6, reflecting softer economic activity amid regional uncertainty and subdued tourism. 

A PMI reading above 50 indicates expansion, while a figure below that signals contraction.

The trends in Egypt and Lebanon contrast with broader regional performance, where Saudi Arabia, the UAE, and Kuwait maintained expansionary momentum in February, with PMIs of 58.4, 55, and 51.6, respectively. 

Egypt’s non-oil sector slips in March 

Weakened demand drove Egypt’s non-oil private sector into contraction territory, prompting firms to cut back on activity and purchases. 

David Owen, senior economist at S&P Global Market Intelligence, said: “The non-oil sector suffered a minor setback in March, with a decline in business conditions undermining the more expansionary tone set in the first two months of the year.” 

However, he noted that Egypt’s PMI remained above its long-run trend, suggesting businesses were still in a relatively stable position. 

The latest PMI survey indicated a significant easing of inflationary pressures, with input costs rising marginally — the slowest pace in nearly five years. 

S&P Global also noted that firms reported only a slight increase in selling prices, signaling a more stable pricing environment. 

“Firms will be particularly buoyed by the improved picture for inflation. Although headline inflation plummeted from 24 percent to 12.8 percent in February mostly due to base effects, a softening of input cost increases according to the March PMI data suggests there could be further reductions going forward,” said Owen. 

He added: “Part of this softening was linked to a weaker US dollar, which remains greatly influenced by the evolving state of US trade policy.” 

According to the report, non-oil companies in Egypt saw a drop in business activity for the first time this year, primarily due to weaker new order intakes. 

S&P Global also highlighted that both domestic and international demand remained subdued in March, prompting firms to cut operations and spending. 

Surveyed companies reported a reduction in headcounts as weak demand and limited capacity pressures dampened workforce needs. 

On a positive note, the construction sector performed well in March, with survey data showing robust growth in both output and new work. 

However, business activity in the manufacturing and wholesale and retail sectors remained subdued. 

Looking ahead, companies expressed concerns about the economic outlook, with output expectations falling to one of the lowest levels on record. 

“The outlook for the local economy is therefore somewhat unclear, which is reflected in a diminishing level of business expectations,” added Owen. 

Egypt is implementing a series of reforms under its the International Monetary Fund-backed economic program. 

In March, it secured a $1.2 billion disbursement from the IMF, bringing total funding under its economic reform program to $3.2 billion. The IMF also approved a $1.3 billion facility for climate-related reforms. 

While the country’s gross domestic product growth rebounded to 3.5 percent in early 2024-25 and inflation has eased, fiscal challenges remain. A $6 billion drop in Suez Canal receipts widened the current account deficit to 5.4 percent of GDP in 2023-24, despite spending controls helping achieve a 2.5 percent fiscal surplus. 

Lebanon’s PMI falls to five-month low 

A separate S&P Global report, published in association with BLOMINVEST Bank, revealed that Lebanon’s PMI declined to 47.6 in March, down from 50.5 in February and 50.6 in January. 

The drop was attributed to weaker output and new orders, driven by subdued tourism and ongoing regional instability. 

Surveyed companies reported that restrained client purchasing power and consumer hesitancy toward non-essential spending led to a contraction in new order intakes at the end of the first quarter. 

“The BLOM Lebanon PMI for March 2025 fell to a five-month low at 47.6, indicating a change of course in the economy toward instability,” said Ali Bolbol, chief economist and head of research at BLOMINVEST Bank. 

He added: “The spillover effects from clashes on the Syrian coast, to renewed escalation between Israel and Hezbollah, to delays in the disarming of the latter have all left their de-stabilizing imprint on the Lebanese private sector.” 

According to the report, Lebanese firms saw a decline in foreign sales, with challenging shipping conditions, high export costs, and regional instability acting as headwinds for international trade. 

S&P Global noted that the drop in new business intakes helped firms clear backlogs of work for the first time this year. 

Signs of spare capacity also prompted businesses to trim their workforce, though job cuts remained mild, affecting just 1 percent of surveyed firms. 

Regarding purchasing activity, Lebanese private sector firms exercised more caution than in February, with buying volumes largely unchanged. However, surveyed companies reported faster shipping times for newly purchased items. 

Despite the slowdown, business sentiment remained optimistic, with growth expectations reaching their highest level since the survey began in May 2013. 

“The only worthwhile news from the March PMI results is that expectations of a better outlook are still positive, though at a more subdued level,” concluded Bolbol. 

Last month, the IMF welcomed Lebanon’s request for support in tackling its economic crisis. 

After more than two years without a president, Lebanon elected a new head of state in January and formed a government led by Prime Minister Nawaf Salam. In February, the IMF signaled openness to a new loan agreement following talks with the finance minister. 

The previous caretaker administration failed to implement the reforms required for an IMF bailout to rescue the collapsed economy. 

Topics: Egypt economy lebanon economy S&P Global Purchasing Managers’ Index (PMI)

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