Overview:
Saudi Arabia's private non-oil sector expanded at its fastest pace in three months during May, driven by improving domestic demand and stable supply chains, according to reporting from Al Madina and Al Jazirah. Simultaneously, commodity markets reflected shifting geopolitical expectations following the Israel-Lebanon ceasefire agreement, with crude oil prices declining while gold surged. The International Monetary Fund affirmed the resilience of the Saudi economy during its Article IV consultation review, reinforcing confidence in the kingdom's macroeconomic stability.
Details:
The non-oil private sector's expansion marks a notable acceleration, with Al Madina and Al Jazirah both reporting the strongest growth performance since February 2026. The sector's recovery reflects sustained consumer spending and improved business confidence despite regional uncertainties.
Energy markets experienced significant movement this week. According to Al Riyadh, Brent crude declined 0.69 percent to 97.14 dollars per barrel following hopes for broader Middle Eastern peace settlements. Simultaneously, gold prices rose, supported by crude's decline and dollar weakness. Al Riyadh reported spot gold trading at 4,450.16 dollars per ounce, up 0.4 percent. Asharq Al-Awsat noted the paradoxical relationship between falling oil prices and rising gold valuations, attributing this to market expectations of extended diplomatic resolution efforts.
The International Monetary Fund concluded its 2026 Article IV consultations with notably positive assessments. According to Al Madina and Asharq Al-Awsat, IMF experts confirmed the Saudi economy achieved 4.5 percent growth in 2025 with inflation below 2 percent, while emphasizing the banking sector's strength and the economy's structural flexibility in withstanding regional geopolitical pressures.
Beyond domestic developments, Egypt advanced plans to issue 500 million dollars in samurai bonds denominated in Japanese yen, per Asharq Al-Awsat, while India announced plans to eliminate capital gains taxes for foreign portfolio investors in government securities.
Outlook:
Investors are monitoring whether peace discussions extend beyond the Lebanon-Israel agreement toward broader Iranian-American negotiations—a development that could reshape energy market trajectories significantly. Additionally, markets are tracking whether the non-oil sector's momentum sustains amid external uncertainties, particularly regarding global interest rate trajectories and regional stability developments.