IMF: Saudi Arabia Reaping Benefits of Transparent Economic, Financial Policies

A general view of Riyadh, Saudi Arabia. (AFP)
A general view of Riyadh, Saudi Arabia. (AFP)
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IMF: Saudi Arabia Reaping Benefits of Transparent Economic, Financial Policies

A general view of Riyadh, Saudi Arabia. (AFP)
A general view of Riyadh, Saudi Arabia. (AFP)

Saudi Arabia is reaping the fruits of success after implementing transparent economic and financial policies, good management of the coronavirus crisis and carrying out economic reforms that have led to increased job opportunities and continued improvement in living standards, revealed IMF Mission Chief for Saudi Arabia Amine Mati.

The Kingdom’s economy was still projected to grow by 7.6% in 2022, which the IMF said would likely be one of the fastest growth rates in the world.

According to Mati, Saudi Arabia’s national transformation plan, Vision 2030, which is supported by the National Investment Strategy and the Public Investment Fund, enhances the transformation of the Kingdom's economy and increases the contribution of the non-oil sector.

Increasing the contribution of the non-oil sector is largely driven by digitization and growth in the tourism sector, governance, and e-commerce.

Mati pointed out that digitization, along with smart city projects, hyperconnectivity, artificial intelligence, advanced robotics, smart analytics, and scalable systems, are priorities that enhance innovation and raise productivity in the Kingdom.

The Saudi economy will achieve a growth rate of 3.7% for the year 2023, predicted the IMF official, adding that the world is facing factors that are slowing economic growth.

Mati noted that Saudi government agencies implementing the Kingdom’s National Investment Strategy will enhance growth to a degree higher than expected by the IMF.

“Saudi Arabia is recovering strongly from the pandemic-induced recession,” said Mati, adding that “sound macroeconomic policies, pro-business transformational structural reforms, and increases in oil production and prices are promoting the Kingdom’s recovery.”

He pointed out that overall growth was already robust at 3.2 % in 2021, driven by the recovery of the non-oil sector, supported by increased job opportunities for Saudi nationals, especially women.

“The latest figures from the second quarter also confirmed strong growth, supported by oil production and prices, but also accompanied by the growth of non-oil GDP,” he remarked.

“Saudi Arabia has a large emerging economy and is a member of the G20,” he affirmed.

“It recovered well from the coronavirus pandemic and we expect its economy to record one of the highest growth rates among the largest economies, at 7.6 % according to our estimates,” Mati told Asharq Al-Awsat.

“GDP data for the first quarter and second quarter of this year also point to a trend of higher growth for 2022,” he added.

“This will be the Kingdom’s highest growth rate in 11 years. This is encouraging because it allows the economy to create more jobs and continue to improve living standards,” he said.

As for the global economy, the official predicted a slower growth inhibited by the repercussions of the Russian-Ukrainian war.

“Global economic growth is expected to be slower than previously expected,” Mati told Asharq Al-Awsat.

“The temporary recovery in 2021 was followed by increasingly bleak developments in 2022.”

“Global production contracted in the second quarter of this year due to several factors,” explained Mati, blaming the pandemic-induced slowdown in China, the war in Ukraine, US consumer spending below expectations and higher-than-expected inflation.

“The IMF forecasts that global growth will slow down from the 6.1% recorded last year to 3.2% in 2022, 0.4 percentage points lower than the April 2022 World Economic Outlook,” he revealed.

Nevertheless, Mati pointed out that growth in the Kingdom is expected to rise significantly to 7.6% in 2022 despite the tightening of monetary policy, fiscal consolidation, and the limited fallout from the war in Ukraine.

“For 2023, we also expect growth in the Kingdom to reach 3.7 %, mostly due to continued growth in non-oil GDP, despite lower oil GDP growth,” he said.

When asked about the extent smart city projects like “The Line” and “NEOM” would reflect in the increased growth in the Saudi public and private sectors, he replied: “The growing role of digitization, e-governance and e-commerce has the potential to boost productivity.”

“The full implementation of the National Investment Strategy by government agencies can lead to the promotion of growth to a degree higher than that predicted by the IMF,” he stated.

“Economic diversification is fundamental to economic development, particularly in the Gulf Cooperation Council countries,” noted Mati, adding that this entails a move towards a more diversified production and business structure.

Speaking about structural transformation, Mati said that, combined with diversification, it could boost productivity, create jobs, and provide a basis for sustainable and inclusive growth.

“Economies tend to grow by upgrading their export baskets to focus on advanced industries, i.e., industries that lead to productivity gains. Based on different countries, there is a dynamic correlation between the development of export products and economic growth,” he went on to say.

In the past two decades, Saudi Arabia has consolidated its position as a global player in the export of oil and chemicals, the latter being a byproduct of its strong oil sector.

According to Mati, the Kingdom has also managed to diversify into some advanced products and has led GCC countries by developing a comparative advantage in refined commodities such as petrochemicals.

Reviewing cooperation between the Kingdom and the IMF, Mati noted: “Cooperation has been excellent and is constantly improving over the years, as the Kingdom has sought reform on a large scale while improving the transparency of its economic and financial policy.”

“Saudi Arabia is an important partner of the IMF, which appreciates the strength of the Kingdom’s contribution to international cooperation,” added Mati.

Saudi Arabia plays an important role in the global oil market and is a major contributor to discussions in the G20, the Gulf Cooperation Council and the MENA region, where it also provides significant support.



Trump Tariffs Sow Fears of Trade Wars, Recession and a $2,300 iPhone

FILE PHOTO: US President Donald Trump delivers remarks on tariffs in the Rose Garden at the White House in Washington, DC, US, April 2, 2025. REUTERS/Carlos Barria/File Photo
FILE PHOTO: US President Donald Trump delivers remarks on tariffs in the Rose Garden at the White House in Washington, DC, US, April 2, 2025. REUTERS/Carlos Barria/File Photo
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Trump Tariffs Sow Fears of Trade Wars, Recession and a $2,300 iPhone

FILE PHOTO: US President Donald Trump delivers remarks on tariffs in the Rose Garden at the White House in Washington, DC, US, April 2, 2025. REUTERS/Carlos Barria/File Photo
FILE PHOTO: US President Donald Trump delivers remarks on tariffs in the Rose Garden at the White House in Washington, DC, US, April 2, 2025. REUTERS/Carlos Barria/File Photo

Countries around the world threatened to wage a trade war with the United States as President Donald Trump's sweeping tariffs fed expectations for a global downturn and sharp price hikes for swathes of goods in the world's biggest consumer market.

The penalties announced by Trump on Wednesday triggered a plunge in world financial markets and drew condemnation from other leaders reckoning with the end of a decades-long era of trade liberalization.

In Japan, one of United States' top trading partners, Prime Minister Shigeru Ishiba said that the tariffs had created a "national crisis" as a plunge in banking shares on Friday set Tokyo's stock market on course for its worst week in years.

Investment bank JP Morgan said it now sees a 60% chance of the global economy entering recession by year end, up from 40% previously.

But there were conflicting messages from the White House about whether the tariffs were meant to be permanent or were a tactic to win concessions, with Trump saying they "give us great power to negotiate."

The US tariffs would amount to the highest trade barriers in more than a century: a 10% baseline tariff on all imports and higher targeted duties on dozens of countries.

That could jack up the price for US shoppers of everything from cannabis to running shoes to Apple's iPhone. A high-end iPhone could cost nearly $2,300 if Apple passes the costs on to consumers, based on projections from Rosenblatt Securities.

Businesses raced to adjust. Automaker Stellantis said it would temporarily lay off US workers and close plants in Canada and Mexico, while General Motors said it would increase US production.

Canadian Prime Minister Mark Carney said the United States had abandoned its historic role as a champion of international economic cooperation.

"The global economy is fundamentally different today than it was yesterday," he said as he announced several countermeasures.

Elsewhere, China vowed retaliation for Trump's 54% tariffs on imports from the world's No. 2 economy, as did the European Union, which faces a 20% duty.

French President Emmanuel Macron called for European countries to suspend investment in the United States.

Other trading partners, including Japan, South Korea, Mexico and India, said they would hold off on any retaliation for now as they seek concessions. Britain's foreign minister said it was working to strike an economic deal with the United States.

But Washington's allies and rivals alike warned of a devastating blow to global trade.

The tariffs "clearly represent a significant risk to the global outlook at a time of sluggish growth," said IMF Managing Director Kristalina Georgieva, calling on Washington to work to resolve trade tensions with its partners and reduce uncertainty.

US Commerce Secretary Howard Lutnick and senior trade adviser Peter Navarro both told cable news programs on Thursday the president would not back off, and that the tariff increases were not a negotiation.

Trump then appeared to contradict them, telling reporters, "The tariffs give us great power to negotiate. Always have. I used it very well in the first administration, as you saw, but now we're taking it to a whole new level."

Stocks suffered a global meltdown, the US dollar crumbled and oil prices were set for their worst week in months as analysts warned the tariffs could dent demand, upend supply chains and hurt corporate profits.

The Dow fell nearly 4%, its biggest one-day percentage loss since June 2020. The S&P 500 lost nearly 5% and the tech-heavy Nasdaq declined nearly 6%, its worst day in percentage terms since the pandemic era of March 2020.

American companies with significant overseas production took a hit. Nike shares lost 14% and Apple fell 9%.

The pain for markets continued into Friday, with Japan's Nikkei set for its biggest weekly drop in five years in a rout led by stocks in Japanese banks, some of the biggest lenders in the world by assets.

Japanese bond yields, meanwhile, fell sharply as investors bet the Bank of Japan may be forced to rethink its plans to raise interest rates.

Trump says the "reciprocal" tariffs are a response to barriers put on US goods, while administration officials said the tariffs would create manufacturing jobs at home and open up export markets abroad, although they cautioned it would take time to see results.

Vice President JD Vance in an interview with Newsmax faulted critics for taking a short-term view.

"That's fundamentally what this is about, the national security of manufacturing and making the things that we need, from steel to pharmaceuticals," Vance said.

Since returning to the White House in January, Trump's on-again, off-again tariff threats have rattled consumer and business confidence. Trump could step back again, as the reciprocal tariffs are not due to take effect until April 9.

"The tariff plan does not appear to be well thought-out. Trade negotiations are a highly technical discipline, and in our view these proposals do not offer a serious basis for negotiations with any country," said James Lucier, founding partner at Capital Alpha.

Economists say the tariffs could reignite inflation, raise the risk of a US recession and boost costs for the average US family by thousands of dollars.

Analysts said the tariffs could also alienate allies in Asia and undercut strategic efforts to contain China.

Trump has slapped a 24% tariff on Japan and a 25% tariff on South Korea, both home to major US military bases. He also hit Taiwan with a 32% tariff as the island faces increased military pressure from China.

Canada and Mexico, the largest US trading partners, were not hit with targeted tariffs on Wednesday, but they already face 25% tariffs on many goods and now face a separate set of tariffs on auto imports.