IMF Expects Saudi Non-Oil Growth to Average 5%, Current Account to 10-Year High Surplus

Petrochemical plant in Saudi Arabia (Asharq Al-Awsat)
Petrochemical plant in Saudi Arabia (Asharq Al-Awsat)
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IMF Expects Saudi Non-Oil Growth to Average 5%, Current Account to 10-Year High Surplus

Petrochemical plant in Saudi Arabia (Asharq Al-Awsat)
Petrochemical plant in Saudi Arabia (Asharq Al-Awsat)

The International Monetary Fund (IMF) maintained its positive outlook for the Saudi economy, given the non-oil strong growth momentum, which is expected to to grow at an average five percent in 2023.

The Fund indicated that the current account improved to a ten-year high surplus in 2022 amid higher oil prices and stepped-up production.

The current GDP surplus reached 13.6 percent, and some sectors exceeded the targets under Vision 2030.

Currency strength

In its latest Article IV, the Fund said that the "inflation rate remains low and appears to be easing."

It noted that inflation will be contained in 2023, and at "2.8 percent, the average CPI will be slightly higher than in 2022, even though a strong currency, subsidies, and gasoline price cap offset inflationary pressures from diminishing labor market slack and a booming non-oil economy."

The output gap is estimated to have closed during 2022, and the momentum is continuing in 2023, with nowcasting estimates "suggesting non-oil growth above 5 percent in H1 2023."

The fiscal surplus in 2022 -the first since 2013- was halved relative to the staff's initial projection of 5.5 percent of GDP.

It mainly reflects "increases in goods and services and capital spending."

Public debt

At 23 percent of GDP, public debt is low and sustainable, with fiscal space available to address potential headwinds.

The IMF reported that the "exchange rate peg to the US dollar remains appropriate given the current economic structure. It is a policy that has been serving the country well to support monetary stability."

Mortgage loans

The report pointed out that despite the mortgage boom in recent years, banking sector risks from the housing sector are assessed to be limited so far.

It stated that "achieving strong, sustained, inclusive, and greener growth" and implementing the "Vision 2030 reform agenda is continuing unimpeded towards a productive and green economy."

A "mid-way stocktaking of the objectives set under Vision 2030 has identified progress on digitalization, the regulatory and business environment, female labor force participation, and higher private sector investment, in some cases with targets set for 2030 already surpassed."

Renewable energy

The mission "welcomes ongoing plans to increase renewable energy by an additional 2.1 GW capacity by 2024, generate savings through efficiency programs (tarshid), deploy carbon Capture, Usage, and Storage technologies, and become the world's leading hydrogen exporter."

The Fund stated that the Saudi Central Bank (SAMA) intervention has helped alleviate liquidity strains as interest rate spreads have now normalized to their historical averages.

The Saudi unemployment rate is at a historical low.

Amid an increase in labor force participation, total unemployment dropped to 4.8 percent by end-2022, from nine percent during Covid, reflecting an increase in Saudi workers in the private sector and expatriate workers (mainly in the construction and agricultural sector) rising back above pre-Covid levels.

The fastest-growing economy

According to the Fund, the Kingdom was the fastest-growing G20 economy in 2022.

"Overall growth reached 8.7 percent, reflecting both strong oil production and a 4.8 percent non-oil GDP growth driven by robust private consumption and non-oil private investment, including giga projects."

The importance of initiatives

Experts pointed out that initiatives and programs undertaken by the Saudi government are essential to developing the non-oil sector, which will positively impact the national economy, expecting it to witness significant growth in the next stage.

Project implementation

Economics Professor Salem Baajaja at the University of Jeddah told Asharq Al-Awsat that the IMF confirmed the rapid growth of the Saudi economy among the G20 economies, considering the Kingdom's plans of Vision 2030 toward a prosperous economy.

Baajaja indicated 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, reflecting the Saudi economy's growth.

Financial stability

Economic analyst Abdulrahman al-Jubairi explained that the Fund's expectations for the five percent growth projection of the non-oil sector in Saudi Arabia confirm the government's role in diversifying income sources and promoting private sector investments.

Jubairi told Asharq Al-Awsat that the Central Bank is making significant efforts to maintain financial stability, raise solvency, and promote technical infrastructure.

He added that the Kingdom could support the banking system due to its large foreign reserves and access to global markets, which reflected positively on the data and indicators of exports from international organizations.

 



US Stocks Fall as Iran Angst Lifts Oil Prices

A screen displays a stock chart at a work station on the floor of the New York Stock Exchange (NYSE) in New York City, US, April 6, 2022. REUTERS/Brendan McDermid
A screen displays a stock chart at a work station on the floor of the New York Stock Exchange (NYSE) in New York City, US, April 6, 2022. REUTERS/Brendan McDermid
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US Stocks Fall as Iran Angst Lifts Oil Prices

A screen displays a stock chart at a work station on the floor of the New York Stock Exchange (NYSE) in New York City, US, April 6, 2022. REUTERS/Brendan McDermid
A screen displays a stock chart at a work station on the floor of the New York Stock Exchange (NYSE) in New York City, US, April 6, 2022. REUTERS/Brendan McDermid

Wall Street stocks retreated early Thursday as worries over US-Iran tensions lifted oil prices while markets digested mixed results from Walmart.

US oil futures rose to a six-month high as Iran's atomic energy chief Mohammad Eslami said no country can deprive the Islamic republic of its right to nuclear enrichment, after US President Donald Trump again hinted at military action following talks in Geneva.

"We'd call this an undercurrent of concern that is bubbling up in oil prices," Briefing.com analyst Patrick O'Hare said of the "geopolitical angst."

About 10 minutes into trading, the Dow Jones Industrial Average was down 0.6 percent at 49,379.46, AFP reported.

The broad-based S&P 500 fell 0.5 percent to 6,849.35, while the tech-rich Nasdaq Composite Index declined 0.6 percent to 22,621.38.

Among individual companies, Walmart rose 1.7 percent after reporting solid results but offering forecasts that missed analyst expectations.

Shares of the retail giant initially fell, but pushed higher after Walmart executives talked up artificial intelligence investments on a conference call with analysts.

The US trade deficit in goods expanded to a new record in 2025, government data showed, despite sweeping tariffs that Trump imposed during his first year back in the White House.


Gold Advances on US–Iran Tensions as Markets Weigh Fed Policy Path

UK gold bars and gold Sovereign coins are displayed at Baird & Co in Hatton Garden in London, Britain, October 8, 2025. REUTERS/Hiba Kola/File Photo
UK gold bars and gold Sovereign coins are displayed at Baird & Co in Hatton Garden in London, Britain, October 8, 2025. REUTERS/Hiba Kola/File Photo
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Gold Advances on US–Iran Tensions as Markets Weigh Fed Policy Path

UK gold bars and gold Sovereign coins are displayed at Baird & Co in Hatton Garden in London, Britain, October 8, 2025. REUTERS/Hiba Kola/File Photo
UK gold bars and gold Sovereign coins are displayed at Baird & Co in Hatton Garden in London, Britain, October 8, 2025. REUTERS/Hiba Kola/File Photo

Gold prices extended gains on Thursday after rising more than 2% in the previous session, as lingering tensions between the United States and Iran prompted a flight to safety, while investors evaluated the Federal Reserve's monetary policy path.

Spot gold rose 0.2% to $4,989.09 per ounce by 1227 GMT. US gold futures for April delivery held steady at $5,008.60.

"Geopolitical concerns are front and centre with reports that, if the US were to take military action against Iran, it could go on for several weeks," said Jamie Dutta, market analyst at Nemo.money, Reuters reported.

Some progress was made during Iran talks this week in Geneva but distance remained on some issues, the White House said on Wednesday.

FED LARGELY UNITED

Top US national security advisers met in the White House Situation Room on Wednesday to discuss Iran and were told all US military forces deployed to the region should be in place by mid-March.

Meanwhile, the Fed's January minutes showed it largely united on holding interest rates steady, but divided over what comes next, with "several" open to rate hikes if inflation remains elevated, while others were inclined to support further cuts if inflation recedes.

The weekly jobless claims data, due later in the day, and Friday's Personal Consumption Expenditures report, the Fed’s preferred inflation gauge, will provide further clues on the central bank's policy trajectory.

Markets currently expect this year's first interest rate cut to be in June, according to CME's FedWatch Tool.

Non-yielding bullion tends to do well in low-interest-rate environments.

Spot silver rose 0.9% to $77.87 per ounce after climbing more than 5% on Wednesday.

Silver is "supported by tight supply and low COMEX stock levels ahead of the delivery period of the March contract. However, given the extent of the historic correction earlier this month, silver is not back on safer ground until it trades back above $86," said Ole Hansen, head of commodity strategy at Saxo Bank.

Spot platinum fell 0.6% to $2,059.55 per ounce, while palladium lost 1.7% to $1,686.47.


Oil Prices Extend Gains on Concerns of Potential US-Iran Conflict

FILE PHOTO: The Phillips 66 Lake Charles Refinery is pictured in West Lake, Louisiana, US, June 12, 2018. REUTERS/Jonathan Bachman/File Photo
FILE PHOTO: The Phillips 66 Lake Charles Refinery is pictured in West Lake, Louisiana, US, June 12, 2018. REUTERS/Jonathan Bachman/File Photo
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Oil Prices Extend Gains on Concerns of Potential US-Iran Conflict

FILE PHOTO: The Phillips 66 Lake Charles Refinery is pictured in West Lake, Louisiana, US, June 12, 2018. REUTERS/Jonathan Bachman/File Photo
FILE PHOTO: The Phillips 66 Lake Charles Refinery is pictured in West Lake, Louisiana, US, June 12, 2018. REUTERS/Jonathan Bachman/File Photo

Oil prices rose on Thursday as the US and Iran attempted to ease a standoff in talks over Tehran's nuclear program while both sides heightened military activity in the key oil-producing region.

Brent futures climbed 23 cents, or 0.3% to $70.58 a barrel by 0735 GMT, while US West Texas Intermediate (WTI) crude gained 25 cents, or 0.4%, to trade at $65.44 a barrel.

Both benchmarks settled more than 4% higher on Wednesday, posting their highest settlements since January 30, as traders priced in the risk of supply disruptions in the event of ‌a conflict.

"Oil prices are ‌rallying as the market becomes increasingly concerned over the potential ‌for ⁠imminent US action ⁠against Iran," said ING analysts in a Thursday note.

Iranian state media reported the country had shut down the Strait of Hormuz for a few hours on Tuesday, without making clear whether the waterway had fully reopened. About 20% ⁠of the world's oil supply passes through the waterway.

"Tensions between Washington ‌and Tehran remain high, but the prevailing view ‌is that full-scale armed conflict is unlikely, prompting a wait-and-see approach," said Hiroyuki Kikukawa, chief strategist of ‌Nissan Securities Investment, a unit of Nissan Securities.

"US President Donald Trump does not ‌want a sharp rise in crude prices, and even if military action occurs, it would likely be limited to short-term air strikes," Kikukawa added.

A degree of progress was made during Iran talks in Geneva this week but distance remained on some issues, the White House said on Wednesday, ‌adding that it expected Tehran to come back with more details in a couple of weeks.

Iran issued a notice to ⁠airmen (NOTAM) that ⁠it plans rocket launches in areas across its south on Thursday from 0330 GMT to 1330 GMT, according to the US Federal Aviation Administration website.

At the same time, the US has deployed warships near Iran, with US Vice President JD Vance saying Washington was weighing whether to continue diplomatic engagement with Tehran or pursue "another option".

Meanwhile, two days of peace talks in Geneva between Ukraine and Russia ended on Wednesday without a breakthrough, with Ukrainian President Volodymyr Zelenskiy accusing Moscow of stalling US-mediated efforts to end the four-year-old war.

US crude and gasoline and distillate inventories fell last week, market sources said, citing American Petroleum Institute figures on Wednesday, contrary to expectations in a Reuters poll that crude stocks would rise by 2.1 million barrels in the week to February 13.

Official US oil inventory reports from the Energy Information Administration are due on Thursday.