Alamy via Reuters
- Demand led by AI, apps and fintech
- 160,000 registrations in Q4
- Further AI growth forecast
Commercial business registrations in Saudi Arabia increased by more than two-thirds in the fourth quarter of 2024, led by a proliferation of technology-based companies setting up in the kingdom.
Over 160,000 new records were issued throughout the three-month period, taking the number of active commercial registrations in the country to more than 1.6 million, according to latest figures from the Ministry of Commerce.
Demand was fuelled by cloud computing services, application development, financial technology (fintech) and tourism, entertainment and talent development, the government release showed.
Scott Cairns, managing director of Dubai-based Creation Business Consultants, said there had been a 6.5 percent increase in the share of artificial intelligence companies within his client base in Saudi Arabia.
AI is projected to contribute $135 billion to the Saudi economy by 2030, accounting for 12.4 percent of GDP, according to consultants PwC.
“Looking ahead, we anticipate further growth, particularly in AI, as large-scale projects like Neom integrate AI solutions across sectors, from transportation to governance. The Public Investment Fund’s recent commitment to prioritise AI investments further strengthens this trend,” Cairns told AGBI.
Ecommerce was also up by 10 percent compared to the previous quarter.
Saudi Arabia’s regional headquarters programme came into operation at the start of 2024, forcing international companies wanting to win government contracts worth SAR1 million ($260,000) or more to have their regional headquarters in Riyadh.
Saudi Arabia’s investment minister said in October the number of companies with a regional HQ in the capital had reached 540, ahead of a 2030 target of 500.
The country is also set to host a series of mega-events over the next decade, including Expo 2030 and the Fifa World Cup in 2034, both of which will involve huge infrastructure spends.
In terms of the World Cup, in particular, for which SAR100 billion ($26.6 billion) will be spent in preparation, companies have been warned that they must be present in the country to benefit from the riches on offer.
James Swallow, commercial director at Sovereign PPG, said: “Many companies previously sitting on the fence will be incentivised to move forward with plans of establishing in the kingdom.”
Despite the surge in registrations, foreign direct investment into Saudi Arabia fell 21 percent in the third quarter of 2024 year on year, according to the country’s statistics agency.
Saudi Arabia recorded SAR18 billion ($4.8 billion) of FDI inflows in the quarter, compared to SAR22.6 billion in the third quarter of 2023, the General Authority for Statistics said.
In October, the International Monetary Fund lowered its GDP growth forecast for Saudi Arabia for 2024 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. The country has set a target of attracting $100 billion a year in foreign direct investment by 2030.
Saudi Arabia’s latest monthly purchasing managers’ index was 58.4 in December, down slightly from the country’s 17-month high of 59 in November but still far above the 50.0 no-change point. Any score over 50 indicates economic expansion.
Naif Al-Ghait, chief economist at Riyad Bank, said: “A significant rise in new orders has bolstered this growth, indicating increased market confidence and demand.”
