Saudi Arabia leads G-20 economies, recording highest economic growth

Achieving success after success, Saudi Arabian economy is expected to achieve tremendous growth, in 2022 as the Saudi Vision 2030 starts to bear fruit. Recently, the World Bank has raised Saudi Arabia’s 2022 growth forecast from 3.3% to 4.9%.

Nevertheless, the IHS Markit index has expected the Saudi economy to record the highest growth levels among the Group of Twenty (G20). The IHS Markit forecast the Kingdom’s gross domestic product (GDP) growth to reach 11.1% during the last quarter of 2021, a wide gap of about 4.5% from its nearest competitor: Italy. The achievement reflects the efficiency of the economic reforms taken by the Kingdom since the launch of its Vision 2030.

The report indicates that such incredible figures are the results of the unlimited support and direct supervision His Royal Highness Prince Mohammed bin Salman bin Abdulaziz, Crown Prince, Deputy Prime Minister, who is also Chairman of the Council of Economic Affairs and Development.

It also can not be separated from the Saudi Vision 2030 programs, demonstrating the strength and efficiency of the economic reforms undertaken by the Kingdom since 2016.

The reforms allowed Saudi Arabia to cushion the negative impacts of the coronavirus (COVID-19) pandemic, despite the huge drop in oil prices. The Kingdom’s economy succeeded in achieving growth, when most of the countries across the globe, including major economies were struggling to handle the COVID-19 disastrous impacts, which several experts say that it exceeded the effects of World War II.

The Saudi GDP growth rate reached 7% in the third quarter of 2021, the highest annual growth rate since 2012, reflecting the Kingdom’s economic potentials for rapid recovery from the effects of the pandemic and the resumption of economic activities, and benefiting from the exceptional efforts adopted by the Saudi government while tackling the challenges of the pandemic and the stimulus measures provided for the national economy.

Saudi Arabia: The Star Among The G20

Similarly, the OECD also said in a recent report that the GDP of the G20 area grew by 1.7% between the second and the third quarter of 2021, up from a moderate quarter-on-quarter growth rate of 0.4% in the second quarter.

According to the OECD, this reverses the slowing trend recorded in the OECD area over the same period from 1.7% in the to 1.1% in Q3.

This was led by the rebound in the Indian economy, which grew by 12.7% in Q3, after a contraction of 11.6% in Q2, mainly driven by fixed investment and private consumption. GDP also rose markedly in Saudi Arabia by 5.8% in Q3, from 1.1% in Q2, exceeding its pre-pandemic level for the first time, and in Turkey by 2.7%, from 1.5%.

Growth recovered more than previously estimated in Canada (by 1.3%, from minus 0.8%), 1 and there

was a robust contribution from some European countries including France and Italy.

However, several other G20 countries recorded a deceleration or a contraction in GDP growth. In

China, quarter-on-quarter GDP growth slowed to just 0.2%, from 1.2%, and in Korea to 0.3%, from

0.8%, in the third quarter of 2021. Growth slipped into negative territory in Australia (minus 1.9%),

South Africa (minus 1.5%), Japan (minus 0.9%), Indonesia (minus 0.6%) and Mexico (minus 0.4%),

and it continued to contract in Brazil (minus 0.1%, after minus 0.4%). These contractions reflected

mainly negative contributions from private consumption in Australia, Indonesia and South Africa, and

from exports in Brazil and South Africa.

Indeed, while GDP for the G20 area as a whole exceeded its pre-pandemic level in the first quarter

of 2021, half of the G20 economies, including all G7 economies except the United States, remain

below pre-pandemic levels

Saudi Policies managed to create jobs

In many countries, the pandemic has taken its toll on several vital sectors, especially the employment sector.

However, in Saudi Arabia the situation was different, the results achieved by the Saudi economy were in contrast to that wave, as the pace of Saudi employment in the private sector hit its highest quarterly level ever, according to administrative records, reaching 90,000 during the fourth quarter of 2021.

As a result of the effectiveness of the Kingdom’s government policies in creating jobs for Saudis in the private sector, the number of Saudi workers in the private sector exceeded, for the first time ever, 1.9 million in December 2021. Meanwhile, the rate of women’s participation in the labor market continued to accelerate, bypassing the 2030 target as it reached 34.1% in the third quarter of 2021, due to the progress of the Kingdom’s social and economic reforms.

As a culmination of the Kingdom’s efforts to diversify the economy and reduce dependence on oil, the value of Saudi non-oil exports amounted to SAR 195 billion by the end of the third quarter of 2021, an increase of 33% compared to the previous year, at a time when the Kingdom was one of the best performing global economies during the pandemic where the decline in the GDP was very limited, with the Kingdom ranking sixth among the G20 countries when taking into consideration the non-oil activities as a determinant of economic performance in the Kingdom.

Observers and economic analysts expect the Saudi economy to continue to prosper, citing the budget surpluses for the first time since 2014, in addition to the expansion in the implementation of ambitious transformation plans and programs beyond 2022.

This economic boom and diversification of the economy will be achieved through several elements that will contribute to pumping more than SAR 12 trillion by 2030.

The World Bank has raised Saudi Arabia’s 2022 growth forecast from 3.3% to 4.9%.

In a statement, the bank said the Kingdom would record 2.3% economic growth in 2023, compared to the previous forecast of 3.2%.

It added that the oil sector will likely witness strong recovery, which will reflect positively on exports.

The non-oil business is also expected to benefit from the large number of vaccinated persons against coronavirus, as well as accelerated investments, the bank said.

In December, Saudi Arabia approved the general budget for the fiscal year of 2022, with an estimated total revenues of SAR 1.045 trillion and spending of SAR 955 billion.