عربي English Türkçe اردو فارسى
Logo
Latest News
Business

IMF: Saudi Non-Oil Growth Will Stay Strong

IMF: Saudi Non-Oil Growth Will Stay Strong
TT
TT

IMF: Saudi Non-Oil Growth Will Stay Strong

IMF: Saudi Non-Oil Growth Will Stay Strong

Amine Mati, head of the International Monetary Fund (IMF) mission to Saudi Arabia, stated that any decline in oil prices is unlikely to hinder the Kingdom’s non-oil economic growth.

He highlighted that domestic demand will continue to drive strong non-oil activity, underscoring the importance of Saudi Arabia’s shift away from oil dependency.

At a seminar hosted by the SRMG-THINK research center to discuss the IMF’s recent report, Mati addressed questions from Asharq Al-Awsat, saying, “Unless there’s a prolonged drop in oil prices, we expect projects to move forward.”

He added that the separation from oil is crucial for the non-oil economy, and without a sustained decline in oil prices, he believes many projects will still come to fruition.

Mati also dismissed concerns regarding OPEC+ delaying its oil production increase by two months, calling it a “minor delay” with little impact on non-oil sectors, which are supported by domestic demand.

Regarding China’s economic struggles, Mati indicated that Saudi Arabia’s growth would remain stable. He explained that while lower oil prices could affect fiscal and current account balances, the overall investment trend would continue.

“A $10 drop in oil prices could increase the fiscal deficit by about 2.5% of GDP,” he noted.

He projected that strong domestic demand will keep non-oil GDP growth at 3.5% in 2024, with a potential increase in investment from the Public Investment Fund, rising from $40 billion to $70 billion annually in the coming years.

He expects non-oil GDP growth to range from 3.9% to 4.4%, with full implementation of reform strategies potentially increasing growth to 8%.

Mati praised Saudi Arabia’s recent adjustments to fiscal spending, which he believes will ensure financial sustainability.

He pointed to stable inflation, declining unemployment, and strong financial reserves as positive indicators for the economy. He stressed the importance of prudent fiscal management to maintain financial stability and continued structural reforms for sustainable growth.

Neda Al-Mubarak, Managing Director of SRMG-THINK, welcomed attendees and highlighted the significance of the IMF report in relation to Saudi Arabia’s Vision 2030 national transformation plan.

Most Viewed

 
 
Business

ECB's Lagarde Renews Integration Call as Trade War Looms

FILE PHOTO: European Central Bank President Christine Lagarde and Governor of the Bank of Finland Olli Rehn arrive at the non-monetary policy meeting of the ECB's Governing Council in Inari, Finnish Lapland, Finland February 22, 2023. Lehtikuva/Tarmo Lehtosalo via REUTERS//File Photo
FILE PHOTO: European Central Bank President Christine Lagarde and Governor of the Bank of Finland Olli Rehn arrive at the non-monetary policy meeting of the ECB's Governing Council in Inari, Finnish Lapland, Finland February 22, 2023. Lehtikuva/Tarmo Lehtosalo via REUTERS//File Photo
TT
TT

ECB's Lagarde Renews Integration Call as Trade War Looms

FILE PHOTO: European Central Bank President Christine Lagarde and Governor of the Bank of Finland Olli Rehn arrive at the non-monetary policy meeting of the ECB's Governing Council in Inari, Finnish Lapland, Finland February 22, 2023. Lehtikuva/Tarmo Lehtosalo via REUTERS//File Photo
FILE PHOTO: European Central Bank President Christine Lagarde and Governor of the Bank of Finland Olli Rehn arrive at the non-monetary policy meeting of the ECB's Governing Council in Inari, Finnish Lapland, Finland February 22, 2023. Lehtikuva/Tarmo Lehtosalo via REUTERS//File Photo

European Central Bank President Christine Lagarde renewed her call for economic integration across Europe on Friday, arguing that intensifying global trade tensions and a growing technology gap with the United States create fresh urgency for action.
US President-elect Donald Trump has promised to impose tariffs on most if not all imports and said Europe would pay a heavy price for having run a large trade surplus with the US for decades.
"The geopolitical environment has also become less favorable, with growing threats to free trade from all corners of the world," Lagarde said in a speech, without directly referring to Trump.
"The urgency to integrate our capital markets has risen."
While Europe has made some progress, EU members tend to water down most proposals to protect vested national interests to the detriment of the bloc as a whole, Reuters quoted Lagarde as saying.
But this is taking hundreds of billions if not trillions of euros out of the economy as households are holding 11.5 trillion euros in cash and deposits, and much of this is not making its way to the firms that need the funding.
"If EU households were to align their deposit-to-financial assets ratio with that of US households, a stock of up to 8 trillion euros could be redirected into long-term, market-based investments – or a flow of around 350 billion euros annually," Lagarde said.
When the cash actually enters the capital market, it often stays within national borders or leaves for the US in hope of better returns, Lagarde added.
Europe therefore needs to reduce the cost of investing in capital markets and must make the regulatory regime easier for cash to flow to places where it is needed the most.
A solution might be to create an EU-wide regulatory regime on top of the 27 national rules and certain issuers could then opt into this framework.
"To bypass the cumbersome process of regulatory harmonization, we could envisage a 28th regime for issuers of securities," Lagarde said. "They would benefit from a unified corporate and securities law, facilitating cross-border placement, holding and settlement."
Still, that would not solve the problem that few innovative companies set up shop in Europe, partly due to the lack of funding. So Europe must make it easier for investment to flow into venture capital and for banks to fund startups, she said.