The Saudi Public Investment Fund (PIF)
As of early 2022, the Saudi Public Investment Fund (PIF) managed assets worth $608 billion, with 23% allocated to international investments. The fund reported a stellar 25% return in 2021, marking a 27% increase from the previous year.
In August 2022, the PIF intensified its focus on the U.S. technology sector, increasing exposure by $7 billion. Notable investments included:
- Google Alphabet: 213,000 shares worth $464 million
- Zoom: 4.7 million shares worth $507 million
- Microsoft: 1.8 million shares worth $474 million
Other key investments included Facebook, PayPal, Amazon, and BlackRock—the world’s largest real estate investment company, managing over $10 trillion in assets.
In the food and beverage sector, the PIF allocated over $300 million to expand Saudi Arabia’s coffee market by establishing the Saudi Coffee Co. Negotiations are ongoing with Starbucks to acquire a significant share of its Alshaya Group, potentially giving the PIF access to 1,700 Starbucks outlets.
By strategically investing in America’s top companies, the PIF, under the leadership of Crown Prince Mohammed bin Salman, is not only building financial returns but also reinforcing Saudi Arabia’s political influence and economic ties with the U.S.
To align with the Saudi Vision 2030 goal of doubling its assets under management to $1.1 trillion, the PIF has committed to investing $40 billion annually until 2025. This strategy has already created over 330,000 jobs in the Kingdom, contributing to its diversification efforts and reducing reliance on oil revenues.
U.S. Economy: Current Trends and Projections
The U.S. dollar has demonstrated remarkable strength, reaching a 20-year high and gaining 14% in 2022. It has outperformed major currencies like:
- The Japanese yen (-24%)
- The euro (-13%)
- The Chinese yuan (-10%)
To combat inflation, the Federal Reserve raised interest rates five times in 2022 and is expected to continue this approach. Investment bank Goldman Sachs has lowered its GDP growth forecast for the U.S. economy in 2023 from 1.5% to 1.1%, predicting:
- Higher unemployment: Rising from 3.7% in 2022 to 4.1% in 2023.
- Slowing growth: A mild recession is expected in mid-2023.
Global Economy: Challenges and Slowdowns
The global economy faces significant challenges, with sluggish growth projections:
- Fitch Ratings: Global GDP growth at 2.4% in 2022, slowing to 1.7% in 2023.
- Recession warnings: The eurozone and the UK are expected to enter a recession by the end of 2022, while the U.S. faces a mild recession in 2023.
- China: COVID-19 restrictions have reduced growth to 2.8% in 2022, with a modest recovery to 4.5% in 2023.
The International Monetary Fund (IMF) echoes these concerns, citing inflation, supply chain disruptions, and weak financial markets as key obstacles. Their projections include:
- World GDP growth: 2.9% in 2022.
- Consumer price inflation: Rising to 8.3% in 2022, then easing to 5.7% in 2023.
Emerging markets and developing economies are particularly vulnerable, with a heightened risk of recession.
Final Thoughts
Saudi Arabia’s Public Investment Fund exemplifies how strategic investments and visionary leadership can drive economic transformation. However, global economic uncertainties highlight the importance of adaptability and resilience in navigating future challenges.
Omar Khattaly
Researcher on Sovereign Wealth Funds and the Political Economy of the Middle East & Africa
