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Saudi Arabia Records Highest Growth Levels among the G20 Countries

Flags of the G20 countries (Asharq Al-Awsat)
Flags of the G20 countries (Asharq Al-Awsat)
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Saudi Arabia Records Highest Growth Levels among the G20 Countries

Flags of the G20 countries (Asharq Al-Awsat)
Flags of the G20 countries (Asharq Al-Awsat)

The IHS Markit Index predicted that the Saudi Arabian economy will record the highest growth levels among the G20 countries in the fourth quarter of 2021, a wide gap of about 4.5 percent from its closest competitor, Italy.

The achievement reflects the efficiency of the economic reforms taken by the Kingdom since the launch of its Vision 2030.

The positive figures come in light of the unlimited support and direct supervision of Crown Prince Mohammad bin Salman, who is also chairman of the Council of Economic and Development Affairs, demonstrating the strength and efficiency of the economic reforms undertaken by the Kingdom since 2016.

The reforms had a significant impact on overcoming the consequences of the COVID-19 pandemic with minimal damage despite sharp declines in oil prices.

The high levels of growth of the Saudi economy come when many countries, including major economies, are still struggling to overcome the repercussions of the pandemic, which are no less than the effects of World War II.

Saudi Arabia's success in achieving great economic growth rates, outperforming G20 countries, is primarily due to the economic plan of Crown Prince Mohammed. It had a significant role in overcoming global challenges, namely the coronavirus pandemic and the decline in oil prices.

The Saudi GDP growth rate reached 7 percent in the third quarter of 2021, the highest annual growth rate since 2012.

It reflects the Kingdom's economic potentials for rapid recovery from the effects of the pandemic and the resumption of economic activities, benefiting from the exceptional efforts adopted by the government while tackling the challenges of the pandemic and the stimulus measures provided for the national economy.

The economic reforms implemented over the past five years by Saudi Arabia played a prominent role in economic diversification efforts.

The COVID-19 pandemic left a significant economic impact on various vital sectors, especially employment.

The results achieved by the Saudi economy were in contrast to that wave, as the pace of Saudi employment in the private sector hit its highest quarterly level ever, according to administrative records, reaching 90,000 during the fourth quarter of 2021.

As a result of the effectiveness of the Kingdom's government policies in creating jobs for Saudis in the private sector, the number of Saudi workers in the private sector exceeded, for the first time, 1.9 million in December 2021.

Meanwhile, the rate of women's participation in the labor market continued to increase, bypassing the 2030 target as it reached 34.1 percent in the third quarter of 2021 due to the Kingdom's social and economic reforms.

The structural reforms witnessed by the Saudi economy and its main drivers, including a legislative environment and an improvement in the contractual environment, contributed to strengthening efforts to diversify the economy and accommodate tens of thousands of job seekers of both sexes.

As a culmination of the Kingdom's efforts to diversify the economy and reduce dependence on oil, non-oil exports amounted to $53 billion by the end of the third quarter of 2021, an increase of 33 percent compared to the previous year.

Saudi Arabia was one of the best performing global economies during the pandemic where the decline in the GDP was minimal, with the Kingdom ranking sixth among the G20 countries when considering the non-oil activities as a determinant of economic performance in the Kingdom.

Economic observers and analysts expect the Saudi economy to continue to prosper, citing the budget surpluses for the first time since 2014, in addition to the expansion in the implementation of ambitious transformation plans and programs beyond 2022.

The economic boom and diversification of the economy will be achieved through several elements that will pump more than $320 billion by 2030.

Meanwhile, the ambitious strategy announced by the Crown Prince to stimulate the Saudi economy by pumping more than $320 billion until 2030, whether through a partner program, sovereign fund investments, or the national investment strategy, will have a considerable impact.

It will increase the competitiveness of the Saudi economy, placing it on top of the most important economies in the region and the most significant economies in the world.

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IMF Cuts Growth Forecasts for Most Countries in Wake of Century-High US Tariffs

International Monetary Fund (IMF) Chief Economist Pierre-Olivier Gourinchas speaks on the "World Economic Outlook" during the IMF/World Bank Group Spring Meetings in Washington, DC, on April 22, 2025. (AFP)
International Monetary Fund (IMF) Chief Economist Pierre-Olivier Gourinchas speaks on the "World Economic Outlook" during the IMF/World Bank Group Spring Meetings in Washington, DC, on April 22, 2025. (AFP)
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IMF Cuts Growth Forecasts for Most Countries in Wake of Century-High US Tariffs

International Monetary Fund (IMF) Chief Economist Pierre-Olivier Gourinchas speaks on the "World Economic Outlook" during the IMF/World Bank Group Spring Meetings in Washington, DC, on April 22, 2025. (AFP)
International Monetary Fund (IMF) Chief Economist Pierre-Olivier Gourinchas speaks on the "World Economic Outlook" during the IMF/World Bank Group Spring Meetings in Washington, DC, on April 22, 2025. (AFP)

The International Monetary Fund on Tuesday slashed its growth forecasts for the United States, China and most countries, citing the impact of US tariffs now at 100-year highs and warning that rising trade tensions would further slow growth.

The IMF released an update to its World Economic Outlook compiled in just 10 days after US President Donald Trump announced universal tariffs on nearly all trading partners and higher rates - currently suspended - on many countries.

It cut its forecast for global growth by 0.5 percentage point to 2.8% for 2025, and by 0.3 percentage point to 3% from its January forecast that growth would reach 3.3% in both years.

It said inflation was expected to decline more slowly than expected in January, given the impact of tariffs, reaching 4.3% in 2025 and 3.6% in 2026, with "notable" upward revisions for the US and other advanced economies.

The IMF called the report a "reference forecast" based on developments through April 4, citing the extreme complexity and fluidity of the current moment.

"We are entering a new era as the global economic system that has operated for the last 80 years is being reset," IMF Chief Economist Pierre-Olivier Gourinchas told reporters.

The IMF said the swift escalation of trade tensions and "extremely high levels" of uncertainty about future policies would have a significant impact on global economic activity.

"It's quite significant and it's hitting all the regions of the world. We're seeing lower growth in the US, lower growth in the euro area, lower growth in China, lower growth in other parts of the world," Gourinchas told Reuters in an interview.

"If we get an escalation of trade tensions between the US and other countries, that will fuel additional uncertainty, that will create additional financial market volatility, that will tighten financial conditions," he said, adding the bundled effect would further lower global growth prospects.

Weaker growth prospects had already lowered demand for the dollar, but the adjustment in currency markets and portfolio rebalancing seen to date had been orderly, he said.

"We are not seeing a stampede or a run to the exits," Gourinchas said. "We're not concerned at this stage about the resilience of the international monetary system. It would take something much bigger than this."

However, medium-term growth prospects remained mediocre, with the five-year forecast stuck at 3.2%, below the historical average of 3.7% from 2000-2019, with no relief in sight absent significant structural reforms.

The IMF slashed its forecast for growth in global trade by 1.5 percentage point to 1.7%, half the growth seen in 2024, reflecting the accelerating fragmentation of the global economy.

Sharply increased tariffs between the United States and China will result in much lower bilateral trade between the world's two largest economies, Gourinchas said, adding, "That is weighing down on global trade growth."

Trade would continue, but it would cost more and it would be less efficient, he said, citing confusion and uncertainty about where to invest and where to source products and components. "Restoring predictability, clarity to the trading system in whatever form is absolutely critical," he told Reuters.

US GROWTH DOWN, INFLATION UP

The IMF downgraded its forecast for US growth by 0.9 percentage point to 1.8% in 2025 - a full percentage point down from 2.8% growth in 2024 - and by 0.4 percentage point to 1.7% in 2026, citing policy uncertainty and trade tensions.

Gourinchas told reporters the IMF did not foresee a recession in the US, but the odds of a downturn had increased from about 25% to 37%. He said the IMF was now projecting US headline inflation to reach 3% in 2025, one percentage point higher than it forecast in January, due to tariffs and underlying strength in services.

That meant the Federal Reserve will have to be very vigilant in keeping inflation expectations anchored, Gourinchas said, noting that many Americans were still scarred by a spike in inflation during the COVID pandemic.

Asked about the impact of any moves by the White House to remove Fed Chair Jerome Powell, Gourinchas said it was "absolutely critical" that central banks were able to remain independent to maintain their credibility in addressing inflation.

US stocks suffered steep losses on Monday as the US president ramped up his attacks on Powell, fueling concerns about the central bank's independence. Stocks opened higher on Tuesday.

US neighbors Canada and Mexico, both targeted by a range of Trump's tariffs, also saw their growth forecasts cut. The IMF forecast Canada's economy would grow by 1.4% in 2025 and 1.6% in 2026, instead of 2% growth projected for both years in January.

It predicted Mexico would be hard hit by tariffs, with its growth dipping to a negative 0.3% in 2025, a sharp 1.7 percentage point drop from the January forecast, before recovering to 1.4% growth in 2026.

LOWER GROWTH IN EUROPE, ASIA

The IMF forecast growth in the Euro Area would slow to 0.8% in 2025 and 1.2% in 2026, with both forecasts about 0.2 percentage points down from January. It said Spain was an outlier, with a 2.5% growth forecast for 2025, a 0.2 percentage point upward revision, reflecting strong data.

Offsetting forces included stronger consumption due to rising wages and a projected fiscal easing in Germany after major changes to its "debt brake." The IMF cut its growth forecast for Germany by 0.3 percentage point to 0.0% in 2025, and by 0.2 percentage point to 0.9% in 2026.

Growth in Britain would hit 1.1% in 2025, 0.5 percentage point below the January forecast, edging higher to 1.4% in 2026, reflecting the impact of recent tariff announcements, higher gilt yields and weaker private consumption.

Trade tensions and tariffs were expected to shave 0.5 percentage point off Japan's economic activity in 2025, compared to the January forecast, with growth projected at 0.6%.

China's growth forecast was cut to 4% for 2025 and 2026, reflecting respective downward revisions of 0.6 percentage point and 0.5 percentage point from the January forecast.

Gourinchas said the impact of the tariffs on China - hugely dependent on exports - was about 1.3 percentage point in 2025, but that was offset by stronger fiscal measures.