Written by Gérard Al-Fil, Dubai

The Saudi Arabian Purchasing Managers’ Index (PMI) rose to 55.8 points in May, up from 55.6 in April. A figure above 50 indicates expansion in the non-oil economy, while a value below 50 would suggest economic contraction.

Net foreign direct investment (FDI) inflows into Saudi Arabia rose by 44% year-on-year in the first quarter of 2025 to 22.20 billion SAR, according to the General Authority for Statistics (GaStat). However, compared to the previous quarter, recorded net FDI fell by 7% from Q4 2024.

Neue strategische Phase für saudi-arabische Banken 

Additionally, a banking study by Alvarez & Marsal (A&M) found that lending by the ten largest publicly listed Saudi banks increased by 5.4% in Q1, mainly due to strong demand for corporate loans.

Sam Gidoomal, Head of Financial Services, Middle East at A&M in Dubai, explained, «Saudi banks are entering a new strategic phase characterised by greater capital discipline and a focus on unlocking liquidity through innovation.»

Stock Prices Decline

On the Saudi Exchange in Riyadh—where expectations play a major role—investors did not share the same optimism. The main index, TASI, dropped by 7.3% in the first half of the year, closing at 11,118.11 points, amid declining trading volumes.

By comparison, the Swiss Market Index rose by 2.8% in the same period; the Dow Jones Index in New York gained 3.8%; and the DAX in Frankfurt and the Hang Seng in Hong Kong soared by an impressive 15.24% and 21%, respectively.

The reason: «The Trump administration’s trade tariff policy dampened investor sentiment in the Gulf,» says Nasser Saidi, Dubai, one of the region’s leading economists. The uncertainty surrounding the impact of higher U.S. punitive tariffs—set to take effect on July 9 (unless bilateral agreements are reached with individual countries beforehand)—drove down oil prices, which in turn dragged stock prices lower in the kingdom as a major oil supplier.

After a January rally that pushed Brent crude oil above 80 dollars per barrel, Trump’s trade policy brought a wave of disillusionment, sending the price tumbling below 60 dollars.