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IMF: Overall Saudi GDP Projected to Grow 7.6%

IMF: Overall Saudi GDP Projected to Grow 7.6%

Thursday, 23 June, 2022 - 08:45
IMF confirms that Saudi Arabia mitigated the economic risks resulting from the Russian-Ukrainian war (Asharq Al-Awsat)

The International Monetary Fund (IMF) has highlighted solid indicators for the Saudi economy, expecting a 7.6 percent overall GDP growth in 2022.

Non-oil growth will increase to 4.2 percent in 2022, with the current account surplus will increase to 17.4 percent of GDP in 2022, said the Fund experts.

An IMF mission conducted discussions for the 2022 Article IV Consultation from May 23-June 6 and issued a concluding statement describing their preliminary findings.

The experts emphasized the strength of the Saudi economy and its financial position, explaining that the country's economic prospects have a positive outlook in the short and medium term.

"The near and medium-term outlook for Saudi Arabia is positive as growth is picking up, inflation will remain contained, and the external position will strengthen further."

The Fund indicated that the Kingdom managed the COVID-19 pandemic well and is well-positioned to weather the risks posed by the war in Ukraine and the monetary policy tightening cycle in advanced economies.

"Economic activity is picking up strongly, supported by a higher oil price and the reforms unleashed under Vision 2030," read the statement.

Saudi authorities' commitment to fiscal discipline should help further strengthen fiscal and external sustainability and avoid procyclicality while implementing the ambitious structural reform agenda will help ensure a durable, inclusive, and green recovery.

"Saudi Arabia is recovering strongly following a deep pandemic-induced recession."

The report also explained that the overall growth was robust at 3.2 percent in 2021, driven by recovering non-oil manufacturing, retail, e-commerce, and the trade sector.

The Fund pointed out that with increased labor force participation of nationals offsetting expatriates' departures, the unemployment rate has fallen further to 11 percent, a 1.6 percent drop from 2020, mainly owing to higher employment for Saudi nationals, particularly women, in the private sector.

The statement said that financial stability risks are well contained, and the banking system is profitable, liquid, and well-capitalized.

The staff's preliminary analysis found that the impact on credit growth and non-oil GDP is negligible and positive for the banking sector profitability when oil prices and liquidity are high.

They touched on the Kingdom's efforts concerning climate policies, stressing that the government is working to intensify investments in blue and green hydrogen production and is undertaking research and development focusing on the circular carbon economy.

They confirmed the strength of the Kingdom's economy and the power of its financial position, reflected in the great effort made by the government to promote its economic reforms in light of Vision 2030.

Saudi Arabia works on various projects in different sectors, including infrastructure, logistics, entertainment, tourism, and mining.

"The mission welcomes the Kingdom's commitment to fiscal sustainability and efforts to avoid procyclicality by setting a spending ceiling that would be delinked from oil price fluctuations."

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