Saudi Arabia’s GFCF Skyrockets to Record High in Q1 2024
In a groundbreaking development, Saudi Arabia’s gross fixed capital formation (GFCF) soared to a remarkable SR317.5 billion ($84.7 billion) in the first quarter of 2024, showing a substantial 7.9 percent surge compared to the same period last year, recent data has unveiled.
Government and Non-Government Sectors Drive Growth
The Ministry of Investment’s report highlights that this impressive expansion was primarily fueled by growth in both the government and non-government sectors. GFCF, which signifies the net increase in physical assets within an economy, plays a critical role in the gross domestic product as it mirrors the accumulation of capital that supports future production capabilities and economic growth.
FDI and Key Initiatives Propel Economic Trajectory
Saudi Arabia’s proactive initiatives to attract foreign direct investment (FDI) and strengthen bilateral relations have significantly boosted the Kingdom’s economic trajectory. FDI serves as a vital catalyst for GFCF development, facilitating funding for investment projects and resource and knowledge transfer across borders, thereby fostering economic expansion and maturation.
Impressive Growth in Investment Licenses and Sector Domination
During this quarter, the Ministry of Investment issued an impressive 3,157 investment licenses, marking a remarkable 93 percent surge compared to the same period last year, excluding licenses issued under the anti-concealment law. The construction and manufacturing sector dominated with 47 percent of total permits, followed by various other sectors.
International Firms Flock to Saudi Arabia
Notably, 127 international firms secured permits to relocate their regional headquarters to Saudi Arabia in the first quarter of 2024, showing a remarkable 477 percent year-on-year upsurge. Leading corporations such as Google, Microsoft, Amazon, and more have established operations in the Kingdom under this program, reflecting the attractiveness of Saudi Arabia as an investment destination.
Future Projections and the National Investment Strategy
According to a report by Goldman Sachs, Saudi Arabia’s National Investment Strategy aims to enhance FDI significantly, with projections targeting growth to 3.4 percent of GDP by 2025 and 5.7 percent by 2030. The strategy also anticipates a rise in GFCF contribution to GDP by 2025 and 2030, showcasing a robust economic outlook for the Kingdom.
The Shareek Program and Boosting Domestic Investment
A cornerstone of the National Investment Strategy, the Shareek program, launched in 2021, aims to boost domestic investment by private sector companies to $1.3 trillion by 2030. With the involvement of 28 private firms, this program seeks to increase non-oil exports significantly, showcasing Saudi Arabia’s commitment to diversifying and expanding its economy.