RIYADH: American multinational computer software company Adobe plans to establish a new regional headquarters in Riyadh by early 2025.
The announcement comes after the firm received license approval from the Saudi Ministry of Investment, enabling the company to better serve the demand for digital customer experiences and creative solutions in the Kingdom and across the region.
Adobe, operating in Saudi Arabia and the Middle East for over 20 years, assists public and private sector firms such as the Saudi Tourism Authority, stc and Riyadh Air in increasing document productivity, and providing digital experiences to their clients.
“We have established presence and we are very proud of the relationship we have built with the private and public organizations such as the Saudi Tourism Authority and Saudi Telecom in the Kingdom,” Luc Dammann, president of Europe, Middle East and Africa at Adobe, said in an interview with Arab News.
He added: “We have accelerated this agenda and this is something that I’m extremely committed to when we looked at how we want to approach the region we have been doing business in the region for over 20 years.”
Adobe has also collaborated with digital transformation partners in the region, including Accenture, AWS and Deloitte Digital as well as IBM, Microsoft and PwC Middle East.
“The Kingdom is home to some of the world’s most pioneering projects. When it comes to digital experiences, and the speed at which new technologies are adopted and embedded, Vision 2030 is world-leading,” Dammann said.
“We are proud to expand our presence in the region to better support customers in realizing their ambitions to deliver outstanding digital experiences.”
On the sidelines of the annual tech conference LEAP 2024, Adobe also partnered with the Kingdom’s national carrier Riyadh Air to integrate with a broad range of travel partners, both within the Kingdom and globally, allowing guests to manage their entire travel experience through its digital properties.
“We announced this on the back of LEAP Strategic Partnership with Riyadh Air, which will be not just an airline but the gateway to the Kingdom as well. The objective here is to do something disruptive in the industry,” Dammann stated.
The top official went on to say that they are also partnering with the Saudi Tourism Authority to enhance the guest experience by providing a personalized portfolio of services tailored to individual guests.
The company is working on developing and implementing large-scale personalization strategies to cater to millions of potential users and customers in real time, with the aim of gaining a significant market share by offering personalized experiences.
“It’s the biggest way to acquire market share in a very competitive market,” Dammann said. “It’s also the biggest barrier to entry you can build to have loyalty with a consumer base.”
Moreover, he noted that Adobe is in “very advanced discussions” with other organizations to scale the company’s business massively in the next 12 months.
World economic growth resilient in June despite PMI dip: S&P Global
Updated 07 July 2024
Nirmal Narayanan
RIYADH: International economic growth showed resilience in June, maintaining the second-highest level observed in the past 13 months, according to S&P Global’s latest report based on the Purchasing Managers’ Index.
The JP Morgan global composite PMI, compiled by S&P Global, edged down to 52.9 in June from 53.7 in May. This slight decrease reflects a slowdown in the expansion rates of manufacturing production and service sector business activities worldwide.
Amidst this global trend, Saudi Arabia’s non-oil private sector PMI stayed strong at 55 in June, fueled by rising demand, increased output levels, and a notable uptick in employment.
A PMI reading above 50 signifies economic expansion, while below 50 indicates contraction. It measures economic trends in manufacturing based on monthly surveys of supply chain managers covering upstream and downstream activities.
“The global all-industry output PMI stepped back 0.8 percentage points to 52.9 in June, with the decline fairly broad-based across sectors and regions. Although suggesting some momentum loss at midyear, the index is still consistent with a solid pace of expansion in global gross domestic product,” said Bennett Parrish, global economist at JP Morgan.
He added: “Declines in the new orders and future output PMIs may raise the risk of growth moderating further, but another move up in the employment PMI suggests that underlying fundamentals remain resilient.”
US and India growth accelerates
The report highlighted accelerated PMI growth rates in the US, India, and Brazil. In the US, output expanded at the fastest pace since April 2022, driven by robust services activity which offset subdued manufacturing growth.
India led the BRIC economies with strong growth momentum recovering from an election-related dip in May, marking one of its strongest performances in 14 years across goods and services sectors.
Similarly, Brazil sustained strong expansion throughout the year with both service and manufacturing sectors contributing positively after a near-stalled growth in May.
“June saw a further slight acceleration of growth in the US, bucking a broader developed world slowdown, while India continued to lead the emerging markets by a wide margin,” said Chris Williamson, chief business economist at S&P Global Market Intelligence.
In contrast, output fell in Canada, having risen briefly in May for the first time in a year, led by a weakened service sector.
“Japan also slipped back into decline. Although only marginal, the downturn was the first recorded for seven months. A first fall in services sector output for 22 months was partly countered by a rise in manufacturing output for the first time in 13 months,” added Williamson.
Russia reported a slight output contraction, marking its first decline in 17 months as a significant drop in services activity countered resilient manufacturing growth.
Growth also slowed in China, albeit merely paying back some of the substantial gains witnessed in May to still register one of the strongest expansions over the past year. However, robust growth in the Asian giant’s manufacturing sector helped counter a marked slowing in services activities in June.
Meanwhile, the UK reported an eighth successive monthly expansion. However, growth slowed in manufacturing and services to result in the weakest upturn this year, albeit partly blamed on a pause in spending ahead of the upcoming election, S&P Global added.
Global sub-sectors stable
The US-based firm noted that growth became more broad-based across all global sub-sectors amidst the slowing of expansion.
“All of the 25 sub-sectors covered by the PMI avoided contraction globally in June for the first time since July 2021. Expansions were reported across the board bar general industrials, which reported stable output,” said Williamson.
The report noted that output rose at the quickest pace in the financial services category, while solid expansions were also seen in the business services, consumer goods and intermediate goods sectors.
However, the rate of expansion was relatively mild in the consumer services sector.
“Other noteworthy developments include a two-year high for chemicals and plastics output and a 28-month high for forestry and paper products, while the autos and parts sector rounded off its best quarter since early 2021,” the analysis added.
Global employment increased for the second consecutive month in June, with the pace of job growth reaching its highest in a year across both manufacturing and service sectors.
“Stronger increases in staffing levels were initiated in both the manufacturing and service sectors, with the sharper increase again registered in the latter. Of the nations covered by the survey, only China and Germany saw reductions in staffing levels,” said S&P Global.
Future outlook
Looking ahead, S&P Global warned of darkening near-term global prospects in June, with business expectations for the year ahead reaching a seven-month low, particularly affected by post-election uncertainties in India and Europe, including the UK and France.
“However, sentiment was also pulled lower by concern over the demand environment going forward, as reflected in a pull-back in new orders growth from May’s one-year high, which left backlogs of work largely unchanged again during the month. The latter is typically a sign of current capacity being sufficient to meet existing demand,” the agency concluded.
Oman’s non-oil sector drives GDP to $27bn in Q1 2024
Updated 07 July 2024
Arab News
RIYADH: A rise in Oman’s non-oil activities boosted the country’s gross domestic product by 0.8 percent year-on-year to 10.45 billion Omani rials ($27.15 billion) in the first quarter of 2024.
Preliminary data from the National Centre for Statistics and Information showed that non-oil activities recorded a value of 7.18 billion rials at the end of the first quarter, reflecting a 3.9 percent surge compared to the same period in 2023.
This aligns with Oman’s economic outlook, which remains favorable, with real growth expected to reach 1.5 percent in 2024, driven by increased gas production and diversification efforts.
Additionally, it supports the government’s efforts to advance governance and efficiency reforms, such as the plan announced in January to boost the economy through the launch of the Future Fund Oman by the Oman Investment Authority. This plan aims to attract foreign investment and bolster investments in local small and medium-sized enterprises.
However, the data also revealed that crude oil activities amounted to 2.99 billion rials, a decrease of 4.4 percent compared to the same period last year.
Similarly, natural gas activities dropped 0.1 percent year-on-year to 524.4 million rials in the first three months of 2024.
Furthermore, total industrial activities recorded 2.18 billion rials, compared to 1.91 billion rials at the end of the first quarter of 2023.
Saudi banks’ aggregate profit reaches 14-month high of $2bn
Updated 07 July 2024
Dayan Abou Tine
RIYADH: Saudi banks aggregate profit reached a 14-month high of SR7.33 billion ($1.96 billion) in May, marking an annual 16 percent rise, newly released data has revealed.
According to the Saudi Central Bank, also known as SAMA, these figures represent profits before zakat and taxes.
Cumulatively, from the beginning of the year to the end of May, banks recorded a total profit of SR34.78 billion, compared to SR31.12 billion during the same period last year.
In June, a McKinsey report highlighted that high hydrocarbon prices, rapid economic expansion, and low unemployment, along with favorable demographics, ambitious public investments, and moderate inflation, have collectively bolstered robust balance sheets and strong margins among Saudi banks.
This region has been enjoying an evolving regulatory environment marked by greater openness, new frameworks for innovation, and measures to improve the ease of doing business.
All Gulf Cooperation Council countries maintain their currencies pegged to the US dollar, causing regional interest rates to closely mirror movements in Washington. In 2023, as the Federal Reserve’s monetary policy increased financing costs in the GCC, both local and global bank profits surged.
Concurrently, headline inflation was moderate, estimated at 2.6 percent in 2023 and projected to decrease to 2.3 percent in 2024 according to McKinsey.
According to the firm, all GCC banks outperformed their counterparts in developed and many emerging markets, remaining on a rapid growth trajectory. They primarily rely on stable domestic deposits, which have proven resilient during economic downturns.
In comparison to April, banks’ profits before zakat and tax rose by 9 percent, marking the highest monthly increase in the past five months.
McKinsey nevertheless highlighted the potential risk to the GCC banking sector if interest rates were to fall and bank managers were to be complacent.
This complacency might deter them from pursuing ambitious transformation initiatives that are crucial for long-term sustainability and growth.
The firm warned that the current high-interest-rate environment, which has bolstered bank profitability, may not persist indefinitely.
If inflationary pressures in the US ease, the Federal Reserve could adjust its monetary policy, potentially lowering interest rates, and thus reduce bank profits.
The advice is for bank executives to not assume that high profits are the new norm and instead prepare for potential future declines in profitability.
It suggests that banks should use their current strong financial position to invest in transformative changes and cost reductions. By doing so, they can enhance efficiency and resilience, ensuring they remain competitive even when interest rates decrease.
The International Monetary Fund praised SAMA’s efforts to safeguard the Kingdom’s financial stability in a June report. It has emphasized that the central bank continues to advance the modernization of regulatory and supervisory frameworks.
Significant progress has been made in developing its financial safety net framework, encompassing bank resolution, emergency liquidity assistance arrangements, and deposit protection fund.
Saudi Arabia keen to get more women in the workforce
Saudi women in tourism and hospitality sectors underline power of workforce diversity, experts explain
Updated 06 July 2024
Reem Walid
RIYADH: Tourism and hospitality in Saudi Arabia are experiencing a remarkable transformation driven by the increased participation of women, thanks to inspirational leaders and strong government action.
This shift is significant considering that tourism is one of the few global industries where women already constitute the majority of the workforce.
Saudi Arabia is keen to get more women in the workforce, and the Kingdom has already surpassed its Vision 2030 ambition of achieving 30 percent female participation in the labor market.
Indeed, the goal has now been upscaled to 40 percent — double the rate seen in 2010, according to World Bank figures.
Tourism and hospitality is seen as a sector where women can thrive, and the Kingdom is working hard to create more opportunities in this area.
According to EHL Insights, just five years ago, Saudi females faced significant barriers when it came to working in hospitality companies, and women had to go to great lengths to convince their families to allow them to pursue education or employment opportunities in this industry.
This has changed thanks to the economic and cultural shifts spearheaded by the Vision 2030 initiative, and according to data issued by R Consultancy Group in March, 45 percent of the sector’s workforce now comprises female professionals – 925,000 workers.
“There are several inspirational female leaders that have helped to strategically shape both the Saudi tourism sector and the regional tourism sector more broadly such as Princess Haifa bint Mohammed Al-Saud, vice minister of tourism, and Basmah Al-Mayman, regional director of the UN World Tourism Organization,” Anne-Laure Malauzat, partner at Bain & Co. in the Middle East, told Arab News.
She went on to stress that on the ground in Saudi Arabia, there is a massive presence of women across different parts of the tourism and hospitality sectors, from the architects designing the Kingdom’s key airports, passport control officers, and cab drivers as well as hospitality leaders and tourist guides.
“Examples of these success stories include Sarah Gasim, senior vice president — head of KSA Hotels and Hospitality at JLL — who managed hotel complexes in the past. (She) is a published author and lectured on hospitality, helping to shape future generations in the sector,” Malauzat said.
From Red Sea Global’s point of view, spokesperson Zainab Hamidaddin Al-Hanoof Al-Hazzani told Arab News that women bring unique perspectives, skills, and insights to roles such as hospitality management, customer service, marketing, and event planning, which significantly enhance the overall quality of service and customer satisfaction.
Tourism and hospitality is seen as a sector where women can thrive, and the Kingdom is working hard to create more opportunities in this area. (SPA)
“Their diverse perspectives, enhanced service delivery, and inclusive workplace contributions are driving innovation and economic growth, making them indispensable to its success,” she said.
Al-Hazzani claimed that women are actively shaping the future of the tourism and hospitality industry in Saudi Arabia, adding: “This is particularly true at RSG where women play a pivotal role in elevating guest experiences, fostering cultural diversity, and contributing to the overarching success of our projects.
For example, our Elite Graduate Program has provided employment opportunities for 250 individuals, with 30 women advancing to management positions.”
Opportunities and challenges for women in the tourism and hospitality sector
The tourism and hospitality sector in Saudi Arabia is undergoing a significant transformation, with a growing focus on cultural tourism, luxury experiences, and heritage preservation which presents a wealth of opportunities for women.
Laila Kuznezov, director, Implementation Practice at management consulting firm Oliver Wyman told Arab News that from leadership roles in hotel management to careers in event planning, cultural tourism experiences, and hospitality education, women can leverage their “unique skills and perspectives” to shape the future of Saudi tourism.
“By empowering women in tourism and hospitality, they are not only creating a more inclusive workforce, but also sending a powerful message to the world. With a diverse pool of talent contributing to the industry, they can create a world-class visitor experience that reflects the Kingdom’s rich heritage, culture tapestry, and forward-thinking vision for the future,” Kuznezov added.
Speaking on the key constraints women face in entering the labor force and securing employment, Kuznezov shed light on how many of the barriers in Saudi Arabia are similar to those faced globally.
By empowering women in tourism and hospitality, they are not only creating a more inclusive workforce, but also sending a powerful message to the world.
Laila Kuznezov, director, Implementation Practice at Oliver Wyman
“A gender wage gap persists, and women at certain education levels, particularly those with only a secondary school leaver’s certificate, have much lower participation rates than men. A huge opportunity lies in capitalizing on the highly skilled female workforce in Saudi Arabia,” she explained.
The director also noted that: “We need to see more women as CEOs, CFOs, and senior managers across all industries, particularly in highly productive sectors driven by technology and knowledge. Encouraging female entrepreneurship is also crucial. The talent and ambition are there – it’s about providing continued support and fostering a culture that actively supports and promotes women in transformative roles.”
She continued to clarify that the recent rise in female labor force participation is a positive indicator, but the next step is ensuring these women secure high-quality jobs that leverage their full capabilities.
“It is also important to support gains for women at all levels and geographic areas. A key focus in Saudi Arabia is ensuring access to the training and childcare options needed for success, especially for women who have been out of the workforce for long periods of time, are first-time job holders, or have lower education levels,” Kuznezov emphasized.
“Since Saudi women tend to stay closer to their hometowns, geographically dispersed training programs and readily available childcare are crucial to expanding regional employment opportunities,” the director further said.
According to Kuznezov, Saudi Arabia is embracing a progressive approach by developing and enabling regulations to promote new forms of work, such as freelancing, part-time work, platform and gig economy work, and remote working.
“These models offer women increased flexibility and more channels to enter and participate in the workforce, which should contribute to continuing the positive trends of increased participation and reduced unemployment for women,” she said.
Women participation’s impact on Vision 2030
Female participation in the tourism and hospitality sector has helped support the Vision 2030 agenda on multiple fronts, believes Bain & Co.’s Malauzat.
“From a talent perspective, enabling the sector transformation through their leadership, skills, and contribution across all parts of the tourism and hospitality lifecycle,” she said.
FASTFACT
In Saudi Arabia, there is a massive presence of women across different parts of the tourism and hospitality sectors, from the architects designing the Kingdom’s key airports, passport control officers, and cab drivers as well as hospitality leaders and tourist guides.
“From a consumer understanding perspective, women globally take an estimated 80 percent of consumer-related decisions so having women represented in the sector is critical to ensure a real understanding of consumers in this space,” the partner affirmed.
She concluded: “From a gender equity perspective, this has been an important contributing factor to helping the Kingdom achieve its overall aspirations for female participation in the labor market nationally.”
From RSG’s lens, according to Al-Hazzani, by actively promoting gender diversity in the workforce within the tourism and hospitality sector, the firm is taking significant strides towards realizing the vision outlined in Vision 2030.
“This initiative aligns seamlessly with the broader objective of cultivating a vibrant and inclusive economy that harnesses the full spectrum of talent and capabilities within the nation,” Al-Hazzani said.
“Recognized as a fundamental driver of economic diversification, the tourism and hospitality sector in particular benefits immensely from the integration of female talent. Their presence not only fuels the sector’s growth but also enhances its competitive edge and long-term viability through delivering an enriched tourism experience and driving innovation,” she added.
The spokesperson justified that by prioritizing gender diversity in the tourism and hospitality workforce, RSG is not only embracing Vision 2030’s ideals but also paving the way for other sectors to do the same.
“Our dedication to inclusivity not only strengthens our economy but also reaffirms our collective commitment of creating a more prosperous and equitable society,” Al-Hazzani concluded.
Saudi banks extend $2bn in new home loans, hitting 16-month high
Bank profits come amid increased mortgage lending, with sector seeing a 13 percent rise in new home loans
Updated 07 July 2024
Dayan Abou Tine
RIYADH: Saudi banks extended SR7.67 billion ($2.05 billion) in residential new mortgage loans to individuals in May, reflecting an annual 13 percent rise, according to the latest data.
Figures released by the Saudi Central Bank, also known as SAMA, showed that this amount marked a 16-month high.
In May, lending for houses accounted for 67 percent of total new bank mortgages, a decrease from 69 percent compared to the same month last year.
Recent data on mortgage figures is a testament to the sustainable demand in housing coupled with an agile and efficient regulatory environment.
Elias Abou Samra, CEO at Rafal Real Estate Development Co.
Meanwhile, lending for apartments increased to 28 percent from 25 percent, while land constituted the smallest portion at 5 percent, down from 6 percent.
Elias Abou Samra, the CEO at Rafal Real Estate Development Co., said: “Recent data on mortgage figures is a testament to the sustainable demand in housing coupled with an agile and efficient regulatory environment.”
He added: “We believe that the market has priced in higher-for-longer interest rates and the buyers are convinced that waiting for normalization of interest rates to buy new homes could be offset by a larger increase in prices.”
Interest rates in the Gulf Cooperation Council nations are significantly influenced by their currency pegs to the US dollar.
This pegging arrangement means that these countries typically follow US monetary policy decisions, particularly those set by the Federal Reserve. Recently, high interest rates in the market have posed challenges for individuals seeking housing loans, as the cost of credit has escalated.
Many had been anticipating a reduction in those rates by the Fed, which could potentially alleviate borrowing costs. However, the current outlook remains uncertain due to persistently high inflation rates in the US.
This uncertainty casts a shadow over the possibility of decreased rates in the foreseeable future, impacting both financial markets and consumer decisions in the housing sector across GCC economies.
However, according to Abou Samra, after a period of wait-and-see, the housing market in the Kingdom is now beginning to regain some of the momentum and activity it had shown before interest rates rose.
Essentially, potential buyers have overcome their initial hesitancy, likely influenced by elevated borrowing costs, and are now actively pursuing homeownership, thereby boosting their demand for bank credit.
The highest growth rate during this period was observed in apartment lending rising by 24.15 percent. In comparison, house lending grew by 9.17 percent, while land saw a growth of 6.54 percent.
“Another important factor is the availability of new products and typologies, particularly in the multi-family segment, that meets the aspiration of young Saudi families and resident expats. We are moving into a higher level of sophistication on the demand and supply side of the equation,” Abou Samra said.
A survey conducted by global property consultancy Knight Frank revealed in a March report a notable shift in expat preferences, with 68 percent expressing a strong inclination towards owning an apartment rather than a villa. This preference is particularly strong among those aged 35-55.
The firm also noted that many respondents are moving from villas to apartments, influenced by factors like the higher costs of the former, affordability concerns, and potentially differing cultural preferences compared to Saudi nationals.
Additionally, the appeal is further highlighted by the fact that 53 percent of surveyed expats expressed a preference for owning a two or three-bedroom apartment. This inclination is likely due to the smaller family sizes typically found among them compared to Saudi nationals.
A 2024 study by Deloitte revealed that in Riyadh, around 80 percent of apartment transactions the previous year fell within the SR250,000 to SR1 million range, primarily serving the low to mid-income segments.
It noted that north Riyadh has become a prominent residential area, while the south zone has seen significant transaction growth due to affordable housing options.
In Jeddah, there is increasing demand for upper-middle to high-end residential properties, particularly in the Northern part, which has experienced notable price increases.
In the Dammam Metropolitan Area, the report indicated that the residential supply is concentrated in the northern regions, targeting the midscale population segment with apartments priced mostly below SR930,000.
When asked about the potential risks of increased demand further driving up prices, especially given the lack of foreseeable interest rate reductions, Abou Samra said that he believes his real estate company has navigated through the challenges posed by high interest rates, noting a slowdown in growth over the past 18 months.
He expressed confidence in the sustainability of current demand levels, stating that a slowdown is not anticipated in the near future. The CEO also emphasized the importance of maintaining a balanced market to prevent excessive increases in land prices.
