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Saudi Arabia’s Economic Resilience Surpasses Forecasts Amid Robust Private Growth


Impressive First-Quarter Results

In a noteworthy performance, Saudi Arabia’s economy expanded by 3.4 percent in the first quarter of 2025, surpassing earlier flash estimates of 2.7 percent issued by the Saudi General Authority for Statistics. This stronger-than-expected growth reflects a combination of a less severe contraction in the oil sector and robust performance in the non-oil segment, underscoring the momentum built through economic reforms.

Sectoral Insights and Shifting Dynamics

Notably, oil-related GDP contracted by a marginal 0.5 percent, a significant improvement from the previously forecasted decline of 1.4 percent. Meanwhile, non-oil growth surged by 4.9 percent, outpacing initial estimates of 4.2 percent. Analysts, including Monica Malik, chief economist at Abu Dhabi Commercial Bank, attribute these gains to sustained private sector dynamism and an adaptive response to lower oil prices through increased production.

Balancing Fiscal Pressures and Growth Initiatives

Despite these favorable figures, the kingdom faces fiscal challenges. With a widening budget deficit, driven in part by falling oil revenues, the International Monetary Fund has warned that maintaining a balance would require oil prices exceeding $90 per barrel, even as current prices hover around $60. In response, Saudi Finance Minister Mohammed Al-Jadaan has signaled a forthcoming review of spending priorities to mitigate fiscal strain. Nonetheless, persistent project investments, fueled by large-scale events and ongoing development under Vision 2030, are expected to sustain economic momentum.

Vision 2030 and Future Prospects

Central to the kingdom’s long-term strategy is Vision 2030, a transformative initiative aimed at reducing oil dependency and boosting the private sector. With upcoming international events such as the 2029 Asian Winter Games and the 2034 World Cup, substantial investments in infrastructure and construction are set to bolster growth despite current fiscal challenges. Senior economist Daniel Richards of Emirates NBD remains optimistic, highlighting that the breadth of ongoing project spending will support growth in the near term.

Conclusion

The resilient performance of Saudi Arabia’s economy in the first quarter of 2025, coupled with strategic reforms under Vision 2030, demonstrates its ability to adapt and thrive amid global fluctuations. As the kingdom navigates fiscal pressures and leverages private sector strength, its economic trajectory continues to offer compelling insights for global market observers.


Competition Authority Launches Comprehensive Review of ExxonMobil Cyprus Acquisition

Investigation Initiated Over Strategic Acquisition

The Competition Protection Authority has commenced a thorough investigation into the acquisition of ExxonMobil Cyprus Limited’s share capital by Petrolina Holdings Public Ltd through Med Energywise Ltd. This inquiry was formally initiated following a session held on 10 September 2025, after an in-depth review of the pertinent report by the Authority’s Service.

Concerns Over Market Compatibility

Authorities have expressed serious concerns regarding the compatibility of the transaction with established competitive practices. The review indicates that the acquisition may affect several critical petroleum markets, both horizontally and vertically, thereby raising the potential for adverse impacts on market dynamics.

Horizontal Market Dynamics

On the horizontal front, potential effects have been identified in the import market for petroleum products, as well as in both wholesale and retail distribution channels of these products. The consolidation is believed to increase the risk of price rises and coordinated actions, given the direct competitive proximity between Petrolina and ExxonMobil.

Vertical and Adjacent Market Implications

Vertical aspects of the merger are also under close scrutiny. The new entity could restrict competitors’ access to critical infrastructure such as storage facilities, supply channels, and customer bases. These restrictions could further affect the onshore distribution of fuels, the wholesale market for lubricants, and specialized technical services connected with fuel station operations.

Local Market Considerations

Particular attention is being paid to the potential concentration in the retail fuel market. The investigation suggests that a reduced competitive landscape within a four-kilometer radius of the companies’ fuel stations could lead to diminished local competition, adversely impacting consumer prices and options.

Next Steps and Industry Impact

The Competition Protection Authority, which reached a unanimous decision to pursue a full investigation, remains open to submissions from parties that might be affected by this transaction, as mandated by current legislation. A final decision is expected within four months upon receipt of all necessary evidence, potentially setting a significant precedent for future market consolidation cases in the energy sector.

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