Saudi Arabia’s economy grew more than expected in the first quarter of 2025, on non-oil and government activities, beating earlier government estimates. 

The kingdom’s first quarter gross domestic product (GDP) grew 3.4% year-on-year, beating flash estimates of 2.7% suggested by the country’s General Authority for Statistics in May. 

The growth was driven in part non-oil activities, which rose 4.9%, beating earlier estimates of 4.2%. Government activities grew 3.2% mirroring last month’s forecast

Oil growth contracted by 0.5%, improving against a 1.4% decline projected in May. 

Wholesale and retail trade, restaurants, and hotels recorded the highest growth rates during the first quarter of 2025, reaching 8.4% year-on-year and 0.7% quarter-on-quarter.

Saudi Arabia recorded strong employment growth since the start of the year, with jobs growing at the fastest pace in Q1 in over 12 years, according to a Riyad Bank survey. 

The seasonally adjusted Saudi Arabia Purchasing Managers’ Index rose to 58.1 in March, dipped to 55.6 in April and rose marginally in May to 55.8, but remained much lower than the recent peak of 60.5 at the start of the year. 

The International Monetary Fund lowered the kingdom’s 2025 GDP forecast to 3% in April, down 0.3% from its January projection. It expects the country to grow 3.7% next year, down from its previous forecast of 4.1%.   

The IMF said in May that the kingdom needs Brent at north of $92 a barrel this year to balance its budget. Oil will average $66.94 a barrel in 2025 and $62.38 a barrel next year, according to IMF’s regional economic outlook released last month.  
 

Here's a roundup of key developments across the OIC ecosystem during the month of May

Editor's note: The Islamic Development Bank has been noted for launching key development projects across member countries but it has, very recently, been joined by the Asian Development Bank, with each pledging a whopping $1 billion each to co-finance joint initiatives. 

Trade Developments

Image Courtesy: AP News

GCC / Malaysia

Gulf Cooperation Council, Malaysia agree to launch free trade talks

The Gulf Cooperation Council (GCC) countries have agreed to begin free trade talks with Malaysia, as announced during the GCC-ASEAN Summit in Kuala Lumpur.

The decision, made on May 26, 2025, marks the start of negotiations aimed at enhancing trade relations between the GCC and Malaysia. (Zawya)

Saudi Arabia / Syria

Syria, Saudi Arabia agree to boost economic cooperation

Syria and Saudi Arabia have announced plans to enhance economic cooperation for mutual benefit and to create jobs for Syrians, following the easing of Western sanctions on Syria earlier this month.

The announcement came during a visit to Damascus by Saudi Foreign Minister Prince Faisal bin Farhan, who met with Syrian President Ahmad al-Sharaa and other officials.

The easing of sanctions is expected to open the door for foreign investment in Syria, which has been in a civil war since March 2011. (AP News)

Investment

OIC

Development banks pledge $2bn for joint development projects

The Islamic Development Bank (IsDB) and the Asian Development Bank (ADB) have renewed their commitment to development by pledging $1 billion each in co-financing for joint operations in their Common Member Countries through 2030.

The aim is to enhance the effectiveness, impact, efficiency, and sustainability of their development operations. (IsDB News)

United States President Donald Trump’s state visit to the Gulf region this week has underscored the renewed strategic alignment between Washington and the Gulf Cooperation Council (GCC), with both sides using the occasion to deepen defence, economic and diplomatic cooperation.

Trump’s three-day tour, which began in Saudi Arabia on May 13 and continues through Qatar and the United Arab Emirates, marks his first official overseas trip since retaking office in January. The visit also coincides with the GCC-US Summit, where Trump and Gulf leaders discussed regional security, trade, and investment strategies.

The Riyadh leg of the trip focused heavily on economic agreements and military cooperation. According to Saudi Crown Prince Mohammed bin Salman, more than $300 billion worth of deals were signed with US companies. These include a $142 billion defence package involving over a dozen firms, $80 billion in technology investments, and $19 billion in energy and aviation deals. Companies involved include Boeing, GE Vernova, Nvidia, and Oracle.

Nvidia and AMD also announced multi-billion-dollar chip deals with Saudi Arabia’s artificial intelligence firm Humain, while Saudi company DataVolt pledged to invest $20 billion in AI data centres and energy infrastructure in the US.

Despite the volume of announcements, Trump pressed Saudi Arabia for up to $1 trillion in investment commitments, far exceeding the current capacity of the Kingdom’s sovereign wealth fund, the Public Investment Fund. Organisers of the investment forum confirmed that 145 deals worth a total of around $300 billion had been signed so far.

In a high-profile speech at the US-GCC summit, Trump declared his intention to explore normalisation of ties with Syria’s new president, Ahmed al-Sharaa, and announced the lifting of US sanctions on Damascus. The move, made at the request of the Saudi Crown Prince and backed by Turkey’s President Recep Tayyip Erdogan, marks a major policy shift and raises questions over the future of US policy towards Iran and Syria.

Trump said lifting the sanctions would give Syria a “fresh start,” and urged Al-Sharaa to sign onto the Abraham Accords and assume responsibility for ISIS detention centres in northeast Syria.

While Syria was brought into the fold, Israel was notably absent from Trump’s itinerary. US officials cited heightened tensions in Gaza and stalled Saudi-Israel normalisation talks as key reasons. Saudi Arabia has insisted that any future recognition of Israel is contingent on a credible two-state solution for Palestine.

In Qatar, Trump is expected to discuss military cooperation and regional mediation efforts. Qatar, which hosts the largest US military base in the Middle East at Al-Udeid, is also playing a key role in Gaza ceasefire negotiations. 

The UAE leg of the trip will focus on economic collaboration, particularly in advanced technologies. In March, UAE National Security Adviser Tahnoon bin Zayed Al Nahyan committed $1.4 trillion in US investments over the next decade in sectors such as semiconductors, AI, and energy. Trump is also expected to reverse Biden-era export restrictions on AI and microchip technology to the UAE.

The GCC countries are among the top arms buyers globally. From 2020 to 2024, Saudi Arabia and Qatar each accounted for 6.8% of global arms imports, while the UAE accounted for 2.6%. The US remains the primary supplier for all three.

Bilateral trade between the US and GCC states exceeded $180 billion in 2024, and foreign direct investment flows remain strong. In 2023, UAE investment stock in the US totalled $35 billion, while Saudi Arabia’s stood at $9.6 billion and Qatar’s at $3.3 billion, according to US Department of Commerce data.

As Trump continues his Gulf tour, US-GCC relations appear to be entering a new phase, driven by transactional diplomacy, regional recalibration, and a shared interest in stability.

While questions remain over the durability of these partnerships and the broader implications for regional peace, the volume of agreements and strategic commitments point to a deepening alignment, one increasingly shaped by economics, security, and technology.
 

US President Donald Trump announced on Tuesday that the US will lift long-running sanctions on Syria. 

The surprise announcement came during Trump’s speech at an investment forum in Riyadh at the start of his Gulf tour on Tuesday. 

The cessation comes as welcome news for the Middle Eastern country, which has battled unrest and political upheaval since more than a decade.  

“I will be ordering the cessation of sanctions against Syria in order to give them a chance at greatness,” Trump said in his speech. 

“Oh, what I do for the crown prince,” he added, prompting laughter from the audience.   

The sanctions were brutal and crippling, the US President said, adding that they served as an important function at the time. 

"But now it’s their time to shine."

 The civil war in Syria, which has triggered its collapse, has been billed as the world’s deadliest and one of the most protracted conflicts of the past three decades, according to a World Bank report published last May.

Trump might reportedly meet Syria’s new leader, Ahmed al-Sharaa, on the sidelines of a GCC meeting.

Trump’s visit to Saudi Arabia began with a flurry of deals, including a $142 billion defence sales agreement, to strengthen the kingdom’s security and space capabilities, the White House said in a statement issued on X. 
 

Bahrain’s sovereign wealth fund Mumtalakat has reported its highest ever net profit since it commenced operations in 2006. 

The fund’s consolidated net profit stood at 363 million Bahraini dinars ($965 million) in 2024, versus a net loss of 497 million Bahraini dinars ($1.3 trillion) the year before. 

"This has been a year of significant transformation, in which Mumtalakat successfully repositioned itself for long-term growth,” said Mumtalakat chairman Shaikh Salman bin Khalifa Al Khalifa.

The restructuring of McLaren Group and the fund’s partnership with Abu Dhabi-based investment vehicle CYVN Holding, contributed to its bottom line.

The group's share of profits from National Bank of Bahrain rose from 33.5 million Bahraini dinars in 2023 to 34.7 million Bahraini dinars last year. 

Bahrain Telecommunications Company reported 25.3 million Bahraini dinars in net profit last year, dipping nominally from 25.6 million Bahraini dinars recorded in 2023. 

Aluminium Bahrain (Alba) reported a net profit of 184.5 million Bahraini dinars in 2024, compared to 118 million Bahraini dinars in 2023.

CEO Shaikh Abdulla bin Khalifa Al Khalifa said that the fund remains committed to optimising, enhancing and growing its portfolio, to deliver sustainable long-term returns that support the kingdom’s economic objectives.

Consolidated revenues rose marginally from 2.1 billion Bahraini dinars in 2023 to 2.2 billion Bahraini dinars last year. Meanwhile, consolidated profit from continuing operations scaled to 544 million Bahraini dinars in 2024, versus a loss of 33 million Bahraini dinars the year before. 

Mumtalakat holds stakes in over 50 companies across financial services, telecommunications, real estate, logistics, consumer products, healthcare and education.

Mumtalakat’s assets under management (AuM) total $18 billion, trailing other biggest SWFs in the region, such as UAE’s Abu Dhabi Investment Authority (AuM: $1.1 trillion) and Saudi Arabia’s Public Investment Fund (AuM: $925 billion). 

The kingdom recorded a 2.6% growth in gross domestic product last year, fuelled by the non-oil sector which grew 3.8%. 

Saudi Arabia’s Public Investment Fund has exceeded its 2024 targets for assets under management by 7%, but the kingdom fell short of other goals under its Vision 2030 plan. 

PIF assets reached $940 billion as of 2024 under the kingdom’s economic transformation agenda, exceeding the annual target of $880 billion. The sovereign wealth fund is expected to reach $2.67 trillion by the end of the decade. 

Unemployment rate among Saudi locals reduced to 7%, surpassing the 2024 target of 7.8% and reaching the kingdom’s 2030 goal six years early, the Vision 2030 Annual Report 2024 showed. Female labour force participation stood at 33.5%, shy of its 2024 target of 35.9%. 

Meanwhile, Saudi home ownership target of 64% for 2024 surpassed last year. 

Saudi Arabia’s GDP reached $937 billion in 2024, rising 1.3% on the previous year, but fell behind last year’s target of $955.76 billion.

Non-oil GDP rose 3.9% year-on-year in 2024 to reach $680.9 billion but trailed its 2024 target of $694.7 billion. Private sector contribution to GDP, however, exceeded the 2024 target of 46% by one percentage point.

Foreign direct investment (FDI) inflows reached $25.6 billion in 2023, but dipped to $20.69 billion in 2024, falling short of its $29 billion target for the year.

As of 2024, 571 companies have established a regional HQ in the kingdom, surpassing the 2030 target of 500 firms.    

S&P Global Ratings revised Saudi’s long-term foreign and local currency rating to 'A+' from 'A' in March, stating that the ‘ongoing social and economic transformation in Saudi Arabia is underpinned by improving governance effectiveness and institutional settings, including deepening domestic capital markets’.

However, the International Monetary Fund (IMF) revised the kingdom’s economic growth forecast in its April report whose forecasts included the impact of tariffs announced by US President Donald Trump on April 2 as well as the initial responses from other countries.

IMF’s April World Economic Outlook report lowered the kingdom’s 2025 GDP forecast to 3%, down 0.3% from its January projection. It expects the country to grow 3.7% next year, down from its previous forecast of 4.1%.   
 

The Sultanate of Oman and the Kingdom of Morocco convened the seventh session of their Joint Committee on 13 April.

In the session, the Omani Foreign Minister Sayyid Badr Hamad Al Busaidi and Moroccan Foreign Minister Nasser Bourita served as co‑chairs. 

In a joint communiqué issued after the meeting, the two delegations reaffirmed the depth of bilateral relations. They pledged to widen cooperation across economic, investment, trade, industrial, tourism and educational spheres. 
Both ministers also emphasised the importance of adopting technological solutions, fostering innovation, and encouraging the private sector to play a greater role.

The session culminated in the signing of four memoranda of understanding addressing digital transformation, renewable energy, mutual recognition of maritime certifications, and sports cooperation. In addition, the two countries concluded an executive programme to enhance collaboration in tourism.

According to the statement, Muscat and Rabat agreed to activate existing accords and explore fresh partnerships in culture and logistics while continuing to bolster trade and investment ties. 
The communiqué further underscored a shared commitment to Arab solidarity and respect for national sovereignty, rejecting interference in domestic affairs. 

Both sides condemned terrorism and extremism in all forms and called for stronger regional and international coordination to combat such threats.

Senior officials from both foreign ministries attended the meeting, including Khalid Salim Bamakhalf, Oman’s ambassador to Morocco, Sheikh Faisal Omar Al Marhoon, Head of the Arab Department at the Foreign Ministry, and Tarek Lahssisne, Morocco’s ambassador to Oman.

Here's a roundup of key developments across the OIC ecosystem during the month of April

Editor's Note: The GCC is looking beyond the region to strengthen cooperation in priority areas, as is evident with Oman's agreements with Morocco, Kuwait's intent to bolster trade ties with Kazakhstan and the UAE's keenness to forge alliances with Turkiye. 

Trade Developments

Oman / Morocco

Oman, Morocco sign new agreements to deepen bilateral ties

Oman and Morocco have agreed to expand cooperation across key sectors including trade, energy, education and tourism, following a joint committee meeting between their foreign ministers.

The meeting highlighted the strong historical ties between the two countries, and the commitment to enhance regular consultation and advance cooperation, particularly in economic, investment, commercial, industrial, tourism, and educational sectors. (Zawya)

UAE / Morocco

First UAE-Morocco Business Council convenes in Sharjah
The UAE-Morocco Business Council held its first meeting in Sharjah.

The meeting was attended by officials from both countries, including the Vice Chairman of the Federation of UAE Chambers of Commerce and Industry, the Ambassador of Morocco to the UAE, and the President of the General Confederation of Moroccan Enterprises. (Zawya)

Algeria

IsDB strengthens cooperation with Bank of Algeria to advance Islamic banking

President of the Islamic Development Bank (IsDB), Dr. Muhammad Al Jasser, met with the Governor of the Bank of Algeria, Dr. Salah Eddine Taleb, to discuss strengthening technical collaboration and enhancing the regulatory and supervisory framework for Islamic banking in Algeria.

During the meeting, Dr. Al Jasser expressed satisfaction with the cooperation between the IsDB and the Bank of Algeria and reiterated the IsDB's commitment to providing technical assistance to support the development of Algeria's Islamic banking ecosystem in line with international best practices. (IsDB)

Kazakhstan / Kuwait

Kuwait, Kazakhstan to strengthen trade ties 

The Kazakhstani Foreign Minister visited Kuwait to participate in the 3rd ministerial meeting of the "Central Asia – Gulf Cooperation Council" format.

The discussions with officials focused on expanding cooperation in sustainable development, infrastructure financing, and socially important projects in Kazakhstan, particularly in the energy, water supply, and agriculture sectors. (GOV.KZ)

UAE / Türkiye

UAE, Türkiye forge stronger economic ties

The UAE and Türkiye held the second session of the Joint Economic and Trade Commission (JETCO) in Abu Dhabi to further expand their trade and commercial relations.

The meeting, co-chaired by officials from both countries, highlighted the rapid progress in UAE-Turkish relations following the implementation of the Comprehensive Economic Partnership Agreement (CEPA) in 2023. (Zawya)