Economy

Saudi Arabia’s FDI inflows fall 21%, putting 2024 target in doubt

December 31, 2024, 5:20 PM

The archaeological site of Al Hijr, near AlUla. Gamal Sharaf says Saudi Arabia’s long-term investment appeal remains robust thanks to substantial government investment in its giga-projects — The archaeological site of Al Hijr, near AlUla. Gamal Sharaf says Saudi Arabia’s long-term investment appeal remains robust thanks to government investment in giga-projects

Sharp year-on-year drop in Q3
Halfway to SAR108bn target
Investor caution suspected

Foreign direct investment into Saudi Arabia has fallen 21 percent year on year, according to the country’s statistics agency.

In the third quarter of 2024, Saudi Arabia recorded SAR18 billion ($4.8 billion) of FDI inflows, compared to SAR22.6 billion in the third quarter of 2023, the General Authority for Statistics said.

FDI inflows were also 8 percent lower than the SAR19.4 billion recorded in the second quarter of 2024.

The latest figures bring total inflow to SAR54.4 billion for the first nine months of 2024. That is below levels from one year ago and halfway to the government’s target of SAR108 billion for the year.

Saudi Arabia aims to quadruple annual FDI inflows to SAR375 billion by 2030.

For more statistics, go to our Saudi Arabia economy page

Gamal Sharaf, a Riyadh-based economist at Euromoney Country Risk, said the FDI drop “may indicate a shift in market sentiment, reflecting caution among investors due to global economic uncertainties, fluctuating oil prices or geopolitical considerations.

“However, it could also signify a period of recalibration, where investors are re-evaluating opportunities in light of evolving market dynamics and ambitious economic reforms under Vision 2030.”

In October, the International Monetary Fund lowered its GDP growth forecast for Saudi Arabia for this year to 1.5 percent – below the average of 2.4 percent for the Middle East and Central Asia region.

Growth in Saudi Arabia is expected to accelerate to 4.6 percent in 2025.

Sharaf said that despite short-term hesitations Saudi Arabia’s long-term investment appeal remains robust thanks to its strategic location, growing non-oil sectors and substantial government investment in Neom and other giga-projects.

He added: “Ultimately, the trend serves as a reminder of the need for continuous structural reforms to maintain Saudi Arabia’s position as a competitive and resilient investment hub in a challenging global environment.”

According to estimates from Gastat, the kingdom’s national unemployment rate was 3.7 percent in the third quarter of 2024. This is an increase of 0.4 percentage points compared to the second quarter of 2024, but a decrease of 0.5 percent compared to the same period in 2023.