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“International Monetary”: 5% growth of the Saudi economy… and the current account surplus to higher levels
The International Monetary Fund continues its positive expectations regarding the Saudi economy, given the strong momentum experienced by the non-oil sector, expecting it to witness strong growth at an average of 5 percent during the current year, indicating at the same time that the current account surplus reaches the highest levels in 10 years, and recorded a total surplus The gross domestic product is 13.6 percent, stressing that some sectors have exceeded the targets of “Vision 2030”.
The International Monetary Fund said, at the conclusion of Article IV consultations with Saudi Arabia, that the inflation rate is still low and is currently declining, and that the government is able to contain it at 2.8 percent this year, thanks to the strength of the currency, subsidies, and ceilings on fuel prices.
The Fund expected that the non-oil growth momentum would remain strong and reach 5 percent until the end of this year, to remain beyond its possible level thanks to strong consumer spending and accelerated implementation of projects and their role in boosting demand.
According to the Fund, Saudi Arabia’s public finances recorded a surplus for the first time since 2013, equivalent to half of experts’ initial forecasts of 5.5 percent of GDP, mainly reflecting an increase in goods and services and capital spending.
Public debt is low and within sustainable limits, at 23 percent of GDP, with the necessary fiscal space available to address potential adverse factors.
The IMF report stressed the importance of the system of pegging the exchange rate to the US dollar to remain appropriate, given the current economic structure, as this policy has benefited the country by helping to support monetary stability.
The IMF report pointed out that despite the boom in real estate loans in recent years, assessments indicate that the risks posed by housing on the banking sector are still limited so far.
And he stated that achieving strong, sustainable, comprehensive and greener growth and implementing the reform plan in light of “Vision 2030” is still continuing without obstacles towards achieving a productive and green economy.
And he indicated that with the passage of the middle period for the specific goals of “Vision 2030”, it showed the extent of progress in terms of digital transformation, the regulatory and business environment, women’s accession to the workforce, and increased private sector investments, indicating that some cases exceeded the set goals.
The International Monetary Fund mission welcomed the ongoing plans to increase renewable energy sources with an additional production capacity of 2.1 gigawatts by 2024, and to generate savings through programs aimed at achieving “rationalization” efficiency, spreading carbon capture, and utilization and storage technologies, to make the Kingdom a leader in hydrogen export at the global level. the world.
The Fund stated that the intervention of the Saudi Central Bank eased liquidity pressures during the past year, stressing that the increase in labor force participation rates and the decline in total unemployment to 4.8 percent at the end of last year compared to 9 percent during the Covid pandemic, reflects the increase in the number of Saudi workers in the private sector, Arrivals have increased again compared to pre-corona levels.
The fastest growing
According to the Fund, the Kingdom was the fastest growing among the economies of the Group of Twenty during the past year, reaching 8.7 percent due to the strength of oil production, and non-oil GDP growth of 4.8 percent, due to the solid levels of private consumption and private investment, including giant projects.
The importance of initiatives
On the other hand, experts pointed out to Asharq Al-Awsat the importance of the initiatives and programs undertaken by the Saudi government to develop the non-oil sector, which will have a positive effect on the national economy, expecting that it will witness significant growth in the next stage, adding to the gross domestic product.
Dr. Salem Bajaja, professor of economics at the University of Jeddah, told Asharq Al-Awsat that the IMF confirms the rapid growth witnessed by the Saudi economy among the G20 economies, given the country’s plans, which are proceeding according to “Vision 2030” towards a prosperous economy.
And Dr. Salem Bajaja continued, that Saudi Arabia’s domestic product increased by 8.7 percent due to the increase in oil and non-oil revenues together, yet consumer spending increased as well as the acceleration of project implementation, which reflects the growth in the Saudi economy.
For his part, Abd al-Rahman al-Jubairi, an economic analyst for Asharq Al-Awsat, explained that the International Fund’s expectations for the continued growth of the non-oil sector in Saudi Arabia by 5 percent confirm the government’s role in diversifying sources of income and enhancing private sector investments, which have shown results on the country’s general budget.
Al-Jubeiri continued, that the Saudi Central Bank is making great efforts to maintain financial stability, raise bank solvency and advanced technical infrastructure, stressing at the same time continued support and follow-up by SAMA to enhance the capabilities of the banking system in light of global challenges.
He added that the Kingdom has a strong ability to provide support to the banking system due to its large foreign reserves and its increased access to global markets, which reflected positively on the data and indicators of exports from international organizations.