Overview:

Saudi Arabia's construction sector expanded moderately during the first half of 2026, with the construction cost index climbing 2.7 percent compared to June 2025. Concurrently, major international financial institutions have signaled headwinds for broader economic growth, citing regional geopolitical tensions and their potential impact on supply chains and commodity markets. Domestic stock markets gained ground amid positive sentiment, while oil prices moved higher on supply concerns.

Details:

The construction cost index advance reflects ongoing infrastructure activity in the kingdom, part of broader development initiatives. The Saudi stock exchange's main benchmark index closed up 76.65 points at 10,775.46, with 160 companies posting gains and trading value reaching 3.7 billion riyals. Commercial licenses issued in the Eastern Province reached 420 new permits during June, signaling continued business formation momentum.

Internationally, the World Bank's chief economist cautioned that escalating regional military tensions may constrain global economic growth to 1.3 percent during 2026, down from earlier projections. Fitch Ratings estimated that government debt in advanced economies could reach a historic 3.8 trillion dollars by year-end 2026. The International Monetary Fund projected France's budget deficit widening to 5.2 percent of gross domestic product in 2026, exceeding official targets.

Oil prices advanced on multiple fronts. Crude futures rose approximately 4 percent in recent sessions, with Brent contracts trading near 94 dollars per barrel as concerns mounted over potential supply disruptions. Gold prices climbed to two-week highs at 4,113.73 dollars per ounce, supported by technical buying ahead of anticipated Federal Reserve communications. Saudi Arabia recorded a 9.69 billion dollar trade surplus with Japan in the first half of 2026, the largest among Gulf Cooperation Council nations, representing 54.97 percent of bilateral trade flows.

Outlook:

Investors are monitoring U.S. Federal Reserve communications and their implications for asset valuations across commodity and equity markets. Analysts remain attentive to Middle East supply chain developments and potential effects on global inflation and growth trajectories through the remainder of 2026.