Saudi Arabia’s economy to grow at fastest rate among G20 members: IMF

The International Monetary Fund (IMF) maintained its forecast for the growth of the Saudi economy for the current and next year at 7.6% and 3.7$, respectively. At these rates, the Saudi economy will be recording the highest growth among the Group of Twenty (G20) countries during the current year, followed by India, which is expected to grow by 6.8%.

The fund’s expectations are in line with the estimates of the Saudi government, which expected the growth of its economy this year by 8%, boosted by the rise in oil production and the growth of the non-oil sector, supported by rapid recovery from the Coronavirus pandemic.

In the event that the Saudi economy records the expected growth rates, it will have achieved the highest growth rates in 11 years, that is, since 2011 when the gross domestic product (GDP) grew at constant prices by 10%.

The International Monetary Fund’s growth forecast for the Saudi economy in 2023 exceeds the Saudi government estimates, which stand at 3.1% during 2023.

On the other hand, regarding the countries of the Group of Twenty, the IMF data indicate that the growth expectations of the two largest economies in the world, the United States and China, are reduced to 1.6% and 3.2%, respectively.

While Russia will be the only country among the group’s countries whose economy will experience a contraction this year by about 3.4%, according to IMF forecasts.

Next year, three countries from the Group of Twenty are expected to experience economic contraction or recession, namely Russia by 2.3%, Germany by 0.3%, and Italy by 0.2%.

Regarding the global economy, the International Monetary Fund indicated that global economic activity is witnessing a broad slowdown that exceeded expectations. Inflation rates exceeded the levels recorded during several previous decades.

Forecasts indicate a slowdown in global growth from 6.0% in 2021 to 3.2% in 2022 and 2.7% in 2023. This represents the weakest growth pattern ever since 2001, except for the period of the global financial crisis and the critical stage of the Covid-19 pandemic.

According to forecasts, global inflation will rise from 4.7% in 2021 to 8.8% in 2022, then decline to 6.5% in 2023 and 4.1% in 2024.

We may further raise our expectations for the growth of the Saudi economy in 2022: IMF

The International Monetary Fund’s Assistant Director, Mission Chief for Saudi Arabia and Head of GCC Division, Amine Mati, revealed that this year the IMF may raise its expectations for the growth of the Saudi economy, which is considered the fastest growing among the world’s largest economies.

Mati explained that this comes amid the boom in the oil sector in addition to the strong growth of the non-oil sector.

Mati said that the International Monetary Fund expects the Saudi economy to grow by 7.6% in 2022, adding that these expectations may be raised.

The head of the International Monetary Fund mission to Saudi Arabia stated that the first half of this year witnessed strong growth in the revenues of the non-oil sector in the Kingdom, expecting this trend to continue for the rest of this year.

Moreover, Jihad Azour the Director of the Middle East and Central Asia Department at the International Monetary Fund, said that Saudi Arabia has succeeded in controlling inflation and has succeeded in improving its non-oil economy.

In an interview with “Al Arabiya” on the sidelines of the IMF and World Bank meetings, Azour confirmed the IMF’s expectations for the Kingdom’s economy to grow by more than 7.6% this year, noting that the recovery in the Saudi economy continues with increased momentum.

He explained that this came as a result of several factors, including the measures taken in 2020 and 2021. These measures were taken to protect the economy from the repercussions of the Coronavirus pandemic.

Azour explained that the expansion of the Saudi non-oil sector and its orientation towards new sectors, in addition to the rise in oil prices and production that strengthened during the past two years led to the momentum of improving the economy of the kingdom.

Azour added that the Saudi economy is booming and its prospects are bright due to the large reserves and the control of inflation.

IMF forecasts in line with S&P

In September, Standard & Poor’s rating agency (S&P Global Ratings) affirmed Saudi Arabia’s long- and short-term sovereign credit rating in local and foreign currencies at A-/A-2 with a positive outlook.

The agency stated in a report that the positive future outlook reflects the strength of GDP growth and the Kingdom’s fiscal policies. This is against the background of its success in overcoming the repercussions of the Coronavirus pandemic. It added that this also reflected the continuity of government reform programs, in addition to the increasing growth of the non-oil economy, which in turn supported all economic indicators.

Standard & Poor’s expects the kingdom’s gross domestic product (GDP) to grow to a 10-year high of 7.5% in 2022, with an expected fiscal surplus in the budget of around 6.3%.

The agency also expected the growth of the production capacity of the Saudi economy and the acceleration of long-term growth, as a result of efforts to develop public finances and massive economic reforms.

In terms of flexibility and performance, the agency is expected to support financial balances in the years 2022-2025, as a result of government efforts to develop public finances, and a commitment to improving spending policy and raising its efficiency, despite the rise in oil prices.

The agency also expected that the cost of sovereign debt would not rise significantly in the Kingdom. This is because the majority of the public debt portfolio is at a fixed rate.

The agency expressed its expectations about inflation rates in the Kingdom as being relatively low, compared to its peers. It also said that these rates would remain under control in return for government support for fuel prices. In addition, the currency is linked to the relatively strong US dollar..

Saudi economy’s strength reflects the resilience of fiscal policies: Al-Jadaan

Earlier, Saudi Finance Minister Mohammed bin Abdullah Al-Jadaan said that the Kingdom was able to enhance its high position regionally and internationally by supporting the continuous reforms and development it is witnessing in various fields to achieve the objectives of Vision 2030.

In his speech on the occasion of the 92nd anniversary of the Saudi National Day, the minister added that: “The anniversary this year coincides with the increasing strength of the Saudi economy. This reflects the strength of fiscal policies and their ability to adapt in the face of challenges, as the global Coronavirus pandemic was dealt with and geopolitical crises were overcome.”

In a statement, Al-Jadaan stressed the importance of these policies to enhance economic growth and stability, and achieve the state’s public financial sustainability.

Al-Jadaan touched on the financial and economic achievements during the current year 2022, stressing that the programs to achieve the Kingdom’s Vision 2030 had a prominent role in achieving these achievements, pointing to the positive results achieved by the programs: financial sector development, financial sustainability, and privatization.

Saudi Arabia recorded an increase in its real GDP of 11%, supported by an increase in non-oil activities by about 5.9%, which helped reduce the GDP deficit rate from 15.8% in 2015 to 2.3% in 2021. It also reduced the level of annual discrepancy in actual total expenditures for their budget estimates ranging from an average of 16% during the period from (2014-2016) to an average of 4% during the program implementation period from 2017 to 2021.

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