Saudi and Mexico get back to business after World Cup exit

Reuters/Kai Pfaffenbach

• The two met in a crunch World Cup tie on Wednesday
• Trade between them is on the rise after a pandemic dip
• Big Mexican leisure brands are expanding in the kingdom

The deepening relationship between Saudi Arabia and Mexico may have been tested for 90 minutes on Wednesday as the central American team prevailed 2-0 in their World Cup match in Qatar.

Both teams went out of the tournament due to results elsewhere in their group, but, more importantly, the two countries are enjoying a bounce in bilateral trade – and officials expect it to continue.

Big Mexican brands are expanding in the kingdom in the aftermath of the pandemic. KidZania, the family entertainment business founded by Xavier López Ancona, opened a centre in Jeddah in 2015 and is now planning a second site in Riyadh.

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Mexican cinema major Cinépolis made its debut in Saudi Arabia last year, part of an influx of international brands, after the kingdom lifted its ban on movie theatres in 2018. The company is planning to open 200 cinemas across the kingdom by 2023.

Habitas, a sustainable hospitality specialist whose flagship resort is in the Mexican town of Tulum, also came to Saudi Arabia in 2021, opening in AlUla.

Trade between Saudi Arabia and Mexico rose by about 7 percent last year to SR3.6 billion ($960 million), from SR3.3 billion in 2020. Trade had fallen from SR3.9 billion in 2019 because of the pandemic, according to Marcelo Ebrard, Mexico’s secretary of foreign affairs.

Ebrard visited Riyadh in March, telling business leaders his delegation wanted “to look into the kingdom’s distinctive investment opportunities”.

Two growth economies

Mexico has the second-largest economy in Latin America and it grew 0.9 percent quarter-on-quarter in Q3, its national statistics agency said last week, despite an aggressive monetary tightening cycle.

Its economy is expected to grow 2.5 percent in real terms in 2022 and 1.4 percent next year, according to Fitch Ratings. The International Monetary Fund forecasts an expansion of 2.1 percent this year and 1.2 percent in 2023.

Saudi Arabia’s GDP expanded by 8.6 percent in the third quarter compared with the same period in 2021, according to initial government estimates. Growth was largely driven by a 14.5 percent increase in oil activities, the General Authority for Statistics said earlier this month, while non-oil activities expanded 5.6 percent.

Mexico and Saudi Arabia first established diplomatic relations in 1952. Since then they have signed 15 bilateral agreements, most of them six years ago. There are now growing calls for a fresh deal to establish a direct air route between the two.

Exporting gas, importing honey

Saudi Arabia is Mexico’s biggest trading partner among Arab nations. The Latin American country’s main exports to Saudi include copper wires, aluminium alloy and honey. The kingdom’s main exports to Mexico include gas and propane.

Another Mexican delegation visited the Saudi capital a year ago, seeking to increase joint investment in sectors including communications, information technology, construction and agriculture. 

In September, Aníbal Gomez-Toledo, Mexico’s ambassador to Saudi Arabia, Bahrain, Oman and Yemen, said his government wanted “to continue strengthening the political dialogue and set the ground to boost our exchanges in the economic field, including trade and investment.”

He added: “We need to increase the flows of tourism between the two countries, and to achieve this goal it will be necessary to review and eventually facilitate the visa process. We would like to increase the presence of Mexico in the region, and Saudi Arabia is the place to do so.”

Since his appointment in 2019, Gomez-Toledo said he had noticed an increasing number of Mexican products in Saudi supermarkets – honey, but also avocados, berries and dried chilis. 

The ambassador also hailed the expansion plans of Cinépolis, which is planning to invest $300 million in Saudi Arabia over the next five years.

Habitas, meanwhile, has reportedly attracted the attention of Riyadh’s sovereign wealth fund. Bloomberg wrote last month that the Public Investment Fund, along with A&K Travel Group, had invested $50 million in the hospitality company, which operates in Morocco and Namibia as well as AlUla and Mexico.

It opened an eco-friendly resort in the desert canyons of Ashar Valley last year, with CEO Oliver Ripley saying: “From our very first trip to AlUla we were really inspired by the people we met and by its natural beauty and heritage.”

The company found that the Royal Commission for AlUla’s “approach to sustainable development aligns very closely to our values and DNA and in our mission to support local communities. The world, now more than ever, needs to create places for people to reconnect with one another and with nature.”