Houthi attacks likely to delay Saudi investment decisions rather than kill projects, Oxford Economics says

Oxford Economics expects the Houthi attacks to show up in Saudi Arabia’s investment pipeline as postponed decisions rather than lost projects. “The initial impact could be more visible in delayed investment decisions than in widespread cancellations,” lead economist Akanksha Samdani told EnterpriseAM, with investors likely to wait for clarity on the security situation before committing.

The clearest sign so far is the postponement of the Future Investment Initiative to next year, which shows what regional tensions can do to the Kingdom’s ability to host events and court capital.

The numbers were already softening before this month. Net FDI inflows fell 17.3% q-o-q to SAR 19.1 bn in 2Q, from SAR 23.1 bn in 1Q, which was itself down year on year.

Exposure varies by sector: “The impact is likely to vary by sector, depending on exposure to travel, transport, supply chains, and physical infrastructure,” Samdani said, putting tourism, hospitality, and aviation among the most immediately affected. Logistics is vulnerable through its reliance on shipping routes, air connectivity and regional supply chains, with higher freight and ins. costs and schedule uncertainty raising project costs.

Energy faces risks from infrastructure attacks and export disruption, where higher oil prices can cushion revenue losses but not physical damage. Energy Minister Prince Abdulaziz bin Salman told the WPC Energy Congress earlier this month that “investment must continue.” Manufacturing, real estate, and large-scale developments are affected more indirectly. “At this stage, it is difficult to quantify the impact on FDI in each sector,” Samdani said.

Projects already under way should hold up better than new ones, she said, though a prolonged crisis would push investors to reassess timelines and expected returns. “Investors may delay new commitments or reassess project returns as security concerns, shipping costs and financing costs rise. Regional uncertainty also could delay private investment and increase pressure on the government to prioritize Vision 2030 projects, but it depends on individual project fundamentals and how much investment has already been committed.”

What would hold confidence in place: Clear communication on security risks and contingency plans, stronger resilience in critical infrastructure and transport routes, and predictable regulation with efficient project approvals, according to Samdani.