#Saudi FDI Inflows Signal Momentum in Push For Foreign Cash - Bloomberg

Saudi FDI Inflows Signal Momentum in Push For Foreign Cash - Bloomberg

Saudi Arabia saw its strongest start to a year for foreign direct investment since 2022, in an early signal the kingdom is gaining some traction in its push to attract overseas capital to support its economic ambitions.

FDI inflows amounted to $6.4 billion in the first quarter, according to preliminary data released on Sunday by the General Authority for Statistics. That’s up 24% from a year earlier and down only slightly from the prior quarter, when inflows reached a one-year high.

Saudi Arabia has made FDI a key focus as it aims to draw in foreign capital to help support the heavy investment needed for Crown Prince Mohammed bin Salman’s multi-trillion dollar economic diversification program. But the kingdom has faced challenges in doing so, with inflows stagnating until recently amid investor challenges and a lack of mega deals.

The need for FDI is becoming increasingly more acute as Saudi Arabia faces deeper budget deficits due to a combination of low crude prices, falling oil export revenue and elevated investment.

While the past two quarters indicate progress on FDI, the kingdom will need a record haul this year to meet its annual target of drawing in $37 billion. It fell short of its 2024 goal by several billion dollars, according to preliminary data.

In other economic figures released on Sunday, Saudi Arabia’s net foreign assets rose to a nine-month high of $435 billion in May. The Saudi unemployment rate fell to a historic low of 6.3% in the first quarter.

The International Monetary Fund recently highlighted continued strength in the labor market, the economy’s resilience to shocks and said it expects Saudi GDP to grow by 3.5% this year, up from a prior 3%.

#SaudiArabia's net foreign direct investment falls 7% in Q1 | Reuters

Saudi Arabia's net foreign direct investment falls 7% in Q1 | Reuters

Saudi Arabia's net foreign direct investment (FDI) fell 7% in the first quarter of 2025 compared to the previous quarter, government data showed on Sunday, as the kingdom continues to lag behind its ambitious FDI goals.

The kingdom drew 22.2 billion riyals ($5.92 billion) in FDI in the three months ended March 31 from 24 billion riyals ($6.40 billion) in the last three months of 2024.

Net FDI rose 44% compared to the same quarter the previous year when the kingdom drew 15.5 billion riyals ($4.13 billion), the General Authority of Statistics data showed.

Raising FDI is a key element of the kingdom's Vision 2030 economic transformation programme, which aims to lower the country's dependence on oil, expand the private sector, and create jobs.

Saudi Arabia has set a goal of attracting $100 billion in FDI by 2030, spending massively on huge development projects known as "giga projects" and expanding sectors like sports, tourism, and entertainment.

But FDI numbers remain far from that target.

Saudi Arabia has been seen as a source of capital rather than a home for investment, and foreign investors can find it difficult to navigate the kingdom's business environment, sources told Reuters when the FDI goal was first announced in 2021.

The kingdom is projected to post a fiscal deficit of around $27 billion this year, which will largely be financed by borrowing, said a recent report by the International Monetary Fund.

Saudi Arabia was the largest emerging market dollar debt issuer last year, but the IMF says the country has room to continue borrowing, with its net debt around 17% of GDP making it one of the least indebted nations globally.

Riyadh has taken steps to encourage foreign firms to invest more in the country.
Since 2021 companies seeking to secure state contracts have been required to set up their regional headquarters in Saudi Arabia.

The government has also said it would update existing investment laws to boost transparency and promote equal treatment of local and foreign investors.

Most Gulf markets end higher on Iran ceasefire, US rate cut expectations | Reuters

Most Gulf markets end higher on Iran ceasefire, US rate cut expectations | Reuters

Most Gulf stock markets closed higher on Sunday, rebounding to levels last seen before the recent Iran-Israel conflict, as a holding ceasefire and growing expectations of U.S. rate cuts lifted investor sentiment.

Saudi Arabia's benchmark index (.TASI), opens new tab advanced 1.2%, led by a 2.3% rise in Al Rajhi Bank (1120.SE), opens new tab and a 3.3% increase in Riyad Bank (1010.SE), opens new tab.

The International Monetary Fund on Thursday raised its 2025 GDP growth forecast for Saudi Arabia to 3.5% from 3%, partly on the back of demand for government-led projects, and supported by the OPEC+ group's plan to phase out oil production cuts.

The world's largest group of oil producers, OPEC+, is set to announce another big increase of 411,000 barrels per day in production for August as it looks to regain market share, Reuters reported on Friday, citing four delegates from the group.

Oil behemoth Saudi Aramco's (2222.SE), opens new tab shares finished flat.

Qatar stock index (.QSI), opens new tab gained 0.8%, with almost all its constituents in positive territory, including the country's largest lender, Qatar National Bank (QNBK.QA), opens new tab, which rose 1.2%.

Investor focus also shifted toward potential U.S. monetary policy easing amid speculation that President Donald Trump may replace the Federal Reserve chair early, fuelling expectations of a more dovish stance from the central bank.

The Fed's decision affects monetary policy in the Gulf where most currencies, including the Saudi riyal, are pegged to the U.S. dollar.

Outside the Gulf, Egypt's blue-chip index (.EGX30), opens new tab closed 0.6% higher, with Commercial International Bank (COMI.CA), opens new tab climbing 1.2% higher.