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Day one of the World Economic Forum’s special meeting in Riyadh saw geopolitical threats, global growth, and energy take center stage. Top decision-makers, industry leaders and government officials discussed policy changes needed to revive struggling economies, achieve stability, and narrow the gap between developed and developing nations. Here’s everything you need to know about the first day:
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Geopolitical tensions are endangering the global growth outlook, Finance Minister Mohamed Al Jadaan said at the forum yesterday. “Today, to me, geopolitical risks are possibly the number one risk as you look at the global economy,” he said, adding that “policymakers will need to be very agile in dealing with this,” as the threat of fragmentation and protectionism looms. “You need to make sure that you actually de-escalate,” he said, adding that the “region needs stability.”
The proof? Economies are growing at a rate that is “weak-by-historic standards,” IMF Managing Director Kristalina Georgieva said. She described a slowdown in global economic activities and “a significant divergence across the world” as two “very serious problems” that global decision makers ought to address. Georgieva said that while some countries are moving forward, others are “falling behind,” without providing further details. The IMF chief said states should implement reforms that are “mindful of the people,” as they become “transmission lines of prosperity,” when paired with health trade and financial flows.
On the other hand, artificial intelligence could potentially set the tone right for global growth: Economy and Planning Minister Faisal Alibrahim said that adopting AI technologies could see tns of USD poured into the global economy within the next decade as it ushers in new industries.
THE LOCAL ANGLE-
Early planning by the government helped cushion multiple external shocks, Al Jadaan said as he highlighted how structural reforms implemented by the government in the past years helped it address economic headwinds since the pandemic. Economic schemes should focus on adaptation and adjustment and outlining long-term plans ahead of crises, he said.
The Kingdom could drive faster GDP growth by pumping more oil,but it wouldn’t be “comprehensive and sustainable growth,” Al Jadaan said. “If we wanted, we could produce 10 mn barrels of oil per day instead of 9.5 mn and achieve a much larger growth in GDP,” he said.
TWEAKING THE PACE-
The government could “downscale” or “accelerate” some of the projects implemented under Vision 2030, Al Jadaan said. “A lot of the targets have been over delivered, there are challenges obviously, and this is why I said we don’t have any ego. We will change, we will adjust [or] extend some of the projects. We will downscale some of the projects [and] accelerate other[s],” he said.
BACKGROUND- Al Jadaan first hinted late last year that delivery plans could be tweaked, with the government saying it will strategically slow the execution of some of its economic transformation projects.
ALL FORMS OF ENERGY ARE NEEDED-
The world will likely need “every source of energy,” Energy Minister Prince Abdulaziz bin Salman said in a separate panel, reiterating the Kingdom’s openness to alternate sources of energy so long as their provision is economically viable. “We have no objection to partnering with everyone; we are ready to transport these particles, especially hydrogen in the form of ammonia through pipelines, but we face challenges, including the clarity of policies and incentives,” he said.
REMEMBER-The Kingdom’s policy was (and remains) consistent: “Fossil fuels will be with us for many, many decades to come,” Saudi climate envoy Adel Al Jubeir said during COP28 in Dubai last year. His statements came amid criticism of Saudi’s rejection of a phase-out of hydrocarbons. Al Jubeir reiterated the Saud continues to invest heavily in green projects, strategically directing investments totaling USD 186 bn into more than 80 projects and counting.
A STRONG 1Q FOR TOURISM-
The number of tourists visiting Saudi rose 10% in the first quarter of the year “despite current conditions,” Tourism Minister Ahmed Al Khateeb told Al Arabiya (watch, runtime: 6:12). He said tourist spending grew by 17%. The minister did not provide a breakdown of the visiting tourists numbers, yet said that the Kingdom is targeting 110 mn local and foreign tourists this year.
REMEMBER-The ministry recently doubled its target for 2030, hoping now to be host to 150 mn tourist trips after it hit its target last year ahead of schedule. The new 2030 target sees 80 mn by domestic travelers and 70 mn by international travelers.
GAZA CRISIS IN FOCUS-
Palestinian President Mahmoud Abbasbrought the conversation on Gaza to the forefront of the event, by appealing to the US to urge Israel to halt its offensive. “We call on the United States of America to ask Israel to not carry on the Rafah attack. America is the only country able to prevent Israel from committing this crime,” he said, adding that strongly opposes the relocation of Palestinians to Jordan and Egypt. “The biggest catastrophe in the Palestinian people’s history would then happen.”
LOCALLY-SOURCED LITHIUM WILL TAKE TIME-
The Kingdom will continue to source lithium from abroad as part of its plans for the nascent EV sector as securing domestic supplies were still at an early stage, Industry and Mineral Resources Minister Bandar Al Khorayef told Reuters. “Lithium is a very important mineral that happens to be part of a very important part of the supply chain, especially for batteries,” he said. “There are some signs which are encouraging, but we need to do more,” he said on sourcing lithium locally. “For something to be economically feasible there are two things we need to look at: the size of deposits and concentration. We do not have enough evidence to say that we have the right size of deposits and concentration.” Al Khorayef said.
The Kingdom’s mineral sector is aiming for the sky: Manara, a JV between PIF and mining giant Ma’aden, is eying a stake in Zambia’s First Quantum Minerals copper mines Sentinel and Kansanshi, and is also about to close a USD 1 bn investment in Barrick Gold’s Reko Diq copper and gold mining project in Pakistan. Meanwhile, Aramco is reportedly planning to extract lithium from brine found in its oilfields.
ON THE SIDELINES-
#1- The Energy Ministry and the EU are set to finalize a MoU on energy “in the next few months,” a statement by the Energy Ministry and the European Commission read (here and here). The announcement was made during a meeting between Energy Minister Prince Abdelaziz bin Salman and European Commissioner for Energy Kadri Simson. The pact will focus on accelerating private investment in the energy transition, including hydrogen, carbon capture, utilization and storage, electricity interconnection and others.
#2- Opec+ is set on drawing more capital into the oil industry, the group’s Secretary-General Hatem Al Ghais said in an interview with Asharq (watch: runtime: 10:22) yesterday. He added that the “ultimate goal of the Opec+ agreement,” beyond balancing out the market, is to promote investments in oil and gas to “supply the world with energy.” This is in tandem with “investing in new sources of energy and the needed technologies to reduce emissions.”
#3- The Kingdom has pledged some USD 500 mn to eradicate polio over the next five years, under a fresh partnership with the Bill & Melinda Gates Foundation, Reuters reports. The move makes the Saudi government among the foundation’s biggest national donors.
#4- Dubai-based luxury real estate developer Damac wants to boost its presence in Saudi: “Our focus in the next 10 years, other than Dubai, is going to be Saudi Arabia,” Damac’s founder and chairman Hussain Sajwani tells CNBC in an interview (watch: runtime: 6:33) on the sidelines of the event.
For context: Damac owns two local data centers — in addition to its real estate investments —, which are set to launch in 2Q 2024, according to Sajwani.
