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We have more color on how the the Kingdom is tracking foreign direct investment data.
The news: The General Authority for Statistics (Gastat) last week said that net FDI inflows dropped 10% q-o-q in 3Q 2023 to SAR 11 bn. Total FDI inflows fell 14.4% q-o-q in Q3, while total outflows of FDI were down 22.5% q-o-q to SAR 5 bn.
Why it matters: It was the first time Gastat released FDI numbers since it moved to a new methodology for FDI calculation back in October. The approach, approved by the IMF, takes into account the standards of the Washington-based lender’s balance of payments manual.
The change: The new FDI calculation system uses data gathered directly from the financial statements of companies and investors to calculate FDI, Deputy Investment Minister for Economic Affairs Saad Al Shahrani told Reuters in an interview last week. The old system was based largely on estimates by SAMA, which Al Shahrani said only accounted for FDI inflows and led to a 25% overvaluation of cumulative FDI stock.
How the new methodology works: “By the end of each year we will align actual numbers from financial statements and the estimates by Gastat based on surveys and try to compile the final numbers,” Al Shahrani said. “We looked at more than 100k financial statements for the last 10 years…. then we were shocked about the details that we gained,” he said.
