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."



EUROPE GAS-Prices Continue to Decline

Model of natural gas pipeline and Gazprom logo, July 18, 2022. REUTERS/Dado Ruvic/Illustration/File Photo
Model of natural gas pipeline and Gazprom logo, July 18, 2022. REUTERS/Dado Ruvic/Illustration/File Photo
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EUROPE GAS-Prices Continue to Decline

Model of natural gas pipeline and Gazprom logo, July 18, 2022. REUTERS/Dado Ruvic/Illustration/File Photo
Model of natural gas pipeline and Gazprom logo, July 18, 2022. REUTERS/Dado Ruvic/Illustration/File Photo

Dutch and British wholesale gas prices continued to declined on Tuesday morning on milder weather forecasts for next week, high wind speeds and stable supply.

The benchmark front-month contract at the Dutch TTF hub was down 0.61 euros at 46.65 euros per megawatt hour (MWh) at 0947 GMT, according to LSEG data.

The contract for March was down 0.52 euro at 46.63 euros/MWh.

In Britain, the front-month contract fell by 2.04 pence to 116.76 pence per therm.

In north-west Europe, although another cold snap is forecast from Friday over the weekend, the latest forecasts are showing milder temperatures than yesterday from Jan. 15, according to LSEG data, Reuters reported.

Wind speeds are expected to remain quite strong today, limiting gas demand.

However, in north-west Europe, gas-for-power demand is expected 36 million cubic metres (mcm) per day higher at 78 mcm/day on the day-ahead.

"Wind speeds are expected still high today, before dropping sharply tomorrow with the cold spell arriving," said LSEG gas analyst Saku Jussila.

In Britain, Peak wind generation is forecast at around 15.1 gigawatts (GW) today and 14.7 GW tomorrow, Elexon data showed.

Analysts at Engie EnergyScan said EU net storage withdrawals have slowed due to a more comfortable spot balance but the storage gap compared to last year remains high. On 5 January, EU gas stocks were 69.94% full on average, compared to 84.96% last year.

Looking further ahead, analysts at Jefferies expect a tight year for global gas markets due to project delays and higher-than-expected demand.

"European and Asian LNG spot gas prices in 2025 could surpass those of 2024, driven by Europe's increased gas injection needs and the loss of Russian exports outpacing the expected growth in global LNG supply," they said.

"Post 2025, the market is expected to loosen with an additional 175 million tonnes of new supply coming online between 2026 and 2030, primarily from the US and Qatar," they added.

In the European carbon market, the benchmark contract was down 0.91 euro at 73.45 euros a metric ton.