Saudi Non-Oil GDP Growth Forecast to Grow 3.9% in 2021

A night view of Riyadh, Saudi Arabia. (Reuters file photo)
A night view of Riyadh, Saudi Arabia. (Reuters file photo)
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Saudi Non-Oil GDP Growth Forecast to Grow 3.9% in 2021

A night view of Riyadh, Saudi Arabia. (Reuters file photo)
A night view of Riyadh, Saudi Arabia. (Reuters file photo)

The International Monetary Fund (IMF) projected Saudi Arabia’s real GDP growth at 2.1 percent this year, noting that the real non-oil GDP growth recovery is expected to reach 3.9 percent in 2021.

Real oil GDP growth is projected to reach -0.5% in 2021, according to the OPEC+ agreement output levels.

Further, the IMF forecast the Saudi deficit to decline to 4.2 percent of the GDP this year.

The statement underscored the positive results of the Saudi economic reforms, projected continuation in the economic recovery, an expected decline in the unemployment rate and inflation.

It also highlighted the success of the Saudi government's swift and decisive containment measures to limit COVID-19 cases and fatalities.

The statement further commented on the effective role of fiscal policies, and financial sector, and employment initiatives launched by the government and the Saudi Central Bank (SAMA) that helped cushion the impact of the pandemic on individuals and the private sector.

This coincides with the great progress in implementing the vaccination campaign during recent months.

The IMF also lauded the Kingdom's strong economic fundamentals supported by Vision 2030, which helped establish robust governance and cooperation between ministries and entities.

In light of this, it highlighted the progress made by the "Etimad" platform in strengthening government financial management.

In addition, it commended the impressive pace of equity and debt market reforms taken by the Saudi Capital Market Authority (CMA) and the National Debt Management Center, which contributed to increasing capital raising options for companies and investment opportunities.

Regarding Saudi women's employment in the labor market, the statement praised the wide steps taken by the government, as estimations show that the rate of Saudi women in the total workforce has increased by 13 points to exceed 33 percent during the past two years.

In addition, it welcomed the Saudi Arabia Green Initiative and its potential in boosting growth and employment, as well as reducing greenhouse gas emissions.

The Ministry of Finance welcomed the IMF statement.

Minister of Finance Mohammed Al-Jadaan said that the statement reaffirms the success of the Kingdom's government in achieving positive results and tangible successes during the most challenging year for the whole world.

"Such results have been achieved despite the impact of the COVID-19 pandemic, fluctuations in oil prices, sharp economic fluctuations, decline in global demand, receding growth and other challenges that the Saudi government has risen to.

“The continued implementation of Vision 2030 programs, plans and goals has enabled the Kingdom to introduce many economic and structural reforms that demonstrate the efforts in developing the financial sector and achieving fiscal sustainability that enhances the Saudi economy's strength despite all the challenges,” Jadaan added.



US Election Weighs on Markets

US Dollar banknotes are seen in this illustration picture taken June 14, 2022. (Reuters)
US Dollar banknotes are seen in this illustration picture taken June 14, 2022. (Reuters)
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US Election Weighs on Markets

US Dollar banknotes are seen in this illustration picture taken June 14, 2022. (Reuters)
US Dollar banknotes are seen in this illustration picture taken June 14, 2022. (Reuters)

The dollar softened and stocks fell on Monday as investors treaded carefully hours before the US presidential election, with a US Federal Reserve interest-rate cut also expected later in the week.

In the US presidential race, Democratic Kamala Harris and Republican Donald Trump remain virtually tied in opinion polls ahead of Tuesday's vote. It might not be clear who won for days after voting ends.

“Tuesday will shape the direction of the world economy and geopolitics for the next four years,” Deutsche Bank analysts wrote.

They cautioned that “there remains a large degree of uncertainty around both the result, including the very tight House (of Representatives) race, and when we will know it.”

Trump's policies on immigration, tax cuts and tariffs may put upward pressure on inflation, bond yields and the dollar, analysts say, while Harris is seen as the continuity candidate.

Uncertainty over the outcome is one reason markets assume the Federal Reserve will choose to cut rates by a standard 25 basis points on Thursday, rather than repeat its outsized half-point easing.

The Bank of England also meets Thursday and is expected to cut by 25 basis points, while the Riksbank is seen easing by 50 basis points and the Norges Bank is expected to stay on hold.

The Reserve Bank of Australia holds its meeting on Tuesday and again is expected to hold rates steady.

“Based on current data, we see no reason for (the Federal Open Market Committee) to rush through rate cuts,” said analysts at ANZ. “The election and uncertainty over the future fiscal path also support arguments for caution in recalibrating monetary policy.”

The euro extended an early climb to be up 0.5% at $1.0891 and looked set to test resistance around $1.0905. The dollar fell 0.6% on the yen to 152.60. The dollar index eased 0.1% to 103.80.

Dealers said the dip in the dollar might be linked to a poll that showed Harris taking a surprise 3-point lead in Iowa, thanks largely to her popularity with female voters.

“Markets are seemingly scaling back some Trump trades, and we suspect the next two days can see some abnormal swings in USD crosses due to tighter volatility conditions ahead of a closely contested and highly binary US election,” ING FX strategist Francesco Pesole said.

European stocks were flat, while oil prices climbed nearly 3% on Monday on OPEC+'s decision for a month's delay in plans to increase output, while investors also focused on the US presidential election.

British stocks outperformed continental indexes to add 0.5%, helped by the energy sector.

Earlier, MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.7%, recovering from its fall to a five-week low on Friday.

Chinese blue-chip stocks gained 1.4%, with the Shanghai Composite Index up 1.2%.

Wall Street also notched slim gains ahead of Tuesday's US election. Futures had the S&P 500 up 0.2% ahead of Monday’s opening bell, while the Nasdaq and Dow Jones were seen 0.1% higher respectively.

Bonds have rallied on Monday as a result of the latest swing in the polls, with yields on 10-year US treasuries down 10 basis points at 4.28%.