RIYADH: The Saudi Arabia’s economy is expected to grow 7.6 per cent this year, up from 3.2 per cent in 2021, on the back of soaring oil revenues, the International Monetary Fund said on Wednesday.
High oil prices will likely drive Saudi Arabia’s economic growth to outpace that of the United States this year.
Last month, the IMF warned that avoiding recession in the United States will be “increasingly challenging” as it again cut its 2022 US growth forecast to 2.3% from 2.9% in late June as recent data showed weakening consumer spending.
The government’s Vision 2030 reform programme, designed to reduce the kingdom’s dependence on oil, has also given the economy a boost as more Saudis join the workforce, particularly women, the IMF said.
“Liquidity and fiscal support, reform momentum under Vision 2030 and high oil prices and production helped the economy recover with a robust growth, contained inflation and a resilient financial sector,” it said.
“Overall growth was robust at 3.2 per cent in 2021, in particular driven by a rebounding non-oil sector — supported by higher employment for Saudi nationals, particularly women.”
Gross domestic product was “expected to increase significantly to 7.6 per cent in 2022 despite monetary policy tightening and fiscal consolidation, and a, thus far, limited fall-out from the war in Ukraine,” the IMF said, while projecting GDP growth of 3.7 per cent in 2023.
The kingdom managed to contain inflation at 3.1 per cent in 2021, and the IMF predicted it would remain little changed this year at 2.8 per cent, even as rates soar in much of the developed world.
]The fund said that was largely due to “low pass through” of the double-digit wholesale price inflation and increasing shipping costs battering the world economy.
Bumper oil revenues and increased tax revenues from the non-oil economy saw the overall fiscal balance improve by almost nine percentage points to a deficit of 2.3 per cent of GDP last year, the IMF said.
“Higher oil prices and stepped-up oil production improved the current account by 8.5 percentage points in 2021, registering a surplus of 5.3 per cent of GDP as strong oil-driven exports surpassed growing imports and large remittance outflows.” –Agencies
