IMF: Overall Saudi GDP Projected to Grow 7.6%

IMF confirms that Saudi Arabia mitigated the economic risks resulting from the Russian-Ukrainian war (Asharq Al-Awsat)
IMF confirms that Saudi Arabia mitigated the economic risks resulting from the Russian-Ukrainian war (Asharq Al-Awsat)
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IMF: Overall Saudi GDP Projected to Grow 7.6%

IMF confirms that Saudi Arabia mitigated the economic risks resulting from the Russian-Ukrainian war (Asharq Al-Awsat)
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."



Gold Gains over 1% as Dollar, Yields Ease; Spotlight on Trade

A gold seller arranges gold bracelets at a gold shop in Bangkok's Chinatown, Thailand, January 27, 2025. REUTERS/Chalinee Thirasupa/ File Photo
A gold seller arranges gold bracelets at a gold shop in Bangkok's Chinatown, Thailand, January 27, 2025. REUTERS/Chalinee Thirasupa/ File Photo
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Gold Gains over 1% as Dollar, Yields Ease; Spotlight on Trade

A gold seller arranges gold bracelets at a gold shop in Bangkok's Chinatown, Thailand, January 27, 2025. REUTERS/Chalinee Thirasupa/ File Photo
A gold seller arranges gold bracelets at a gold shop in Bangkok's Chinatown, Thailand, January 27, 2025. REUTERS/Chalinee Thirasupa/ File Photo

Gold prices gained over 1% on Monday as the dollar and US bond yields weakened amid uncertainty over trade talks ahead of a US deadline of August 1 for countries to strike deals or face more tariffs.

Spot gold was up 1.2% at $3,390.79 per ounce at 9:52 ET (1352 GMT). US gold futures were up 1.3% to $3,402.40.

The US dollar index was down 0.4%, making dollar-denominated gold more affordable for buyers using other currencies, while benchmark 10-year U.S. Treasury yields hit a more than one-week low, Reuters reported.

"With the August 1st deadline looming, it brings a level of uncertainty to the market and that certainly is supportive," said David Meger, director of metals trading at High Ridge Futures.

The European Union is exploring a broader set of possible counter-measures against the US as prospects for an acceptable trade agreement with Washington fade, according to EU diplomats.

On the interest rate front, traders are pricing about a 63% chance of a rate cut in September, according to the CME FedWatch Tool.

U.S. Treasury Secretary Scott Bessent said the entire Federal Reserve needed to be examined as an institution and whether it had been successful.

Talk of earlier than expected U.S. rate cuts is building, with speculation around a possible replacement of Fed Chair Jerome Powell and reshaping of the Fed adding to market jitters, Meger said.

Gold is considered a hedge against uncertainty and tends to perform well in a low interest rate environment.

Data showed that the world's leading gold consumer, China, brought in 63 metric tons of the precious metal last month, the lowest amount since January. Its imports of platinum in June fell 6.1% from the prior month.

Spot silver gained 1.8% to $38.86 per ounce, platinum rose 2.2% to $1,453.17 and palladium was 3.5% higher at $1,284.46.