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Moody’s Says Saudi Economic Growth at 10.2%, Driven by Non-Oil Sector Development

Saudi Arabia is moving towards diversifying sources of income and growing the national economy through non-oil output (Asharq Al-Awsat)
Saudi Arabia is moving towards diversifying sources of income and growing the national economy through non-oil output (Asharq Al-Awsat)
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Moody’s Says Saudi Economic Growth at 10.2%, Driven by Non-Oil Sector Development

Saudi Arabia is moving towards diversifying sources of income and growing the national economy through non-oil output (Asharq Al-Awsat)
Saudi Arabia is moving towards diversifying sources of income and growing the national economy through non-oil output (Asharq Al-Awsat)

Moody’s said that the Saudi economy grew by 10.2 % during the first nine months of 2022. Experts confirmed to Asharq Al-Awsat that the government’s programs and initiatives succeeded in enabling the private sector to achieve desired goals of diversifying the country’s sources of income.

According to Moody’s report, Saudi economic growth was driven by the recovery of oil production and the rapid growth in the non-oil sector.

Moody’s estimates come at a time when the Saudi General Authority for Statistics revealed that GDP growth increased by 8.8 % until the third quarter of 2022, which is higher than government estimates of 8.5 %.

This comes at a time when the Saudi cabinet approved the state’s general budget for the fiscal year 2023 last week. According to the budget, total spending will amount to SAR 1114 billion ($297 billion).

Meanwhile, revenues are estimated at SAR 1130 billion ($301.3 billion) with a surplus of 16 billion riyals ($4.2 billion).

Moody’s predictions were based on their assessment of the Kingdom’s improving track record of fiscal policy effectiveness, together with the strength of institutions and governance in the country.

This is reflected by the robust effectiveness of the Kingdom’s monetary and macroeconomic policies.

According to the firm’s report, the strong growth of the Saudi non-oil sector over the past and present years (averaging 5 % annually through the second quarter of 2022) indicates that economic diversification efforts are gaining momentum.

Several government-sponsored mega projects may move from design to construction, added Moody’s.

Moody’s estimated the growth of the Saudi economy at 10.2 % based on data and the Saudi government's efforts to control financial expenditure across sectors, Fahd bin Juma, an economist, told Asharq Al-Awsat.

The Saudi government was able to contain global inflation by setting a higher ceiling for energy prices, added Juma, noting that the Kingdom’s real GDP growth is expected to reach 8.5 % in 2022.

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IMF: Middle East Conflict Escalation Could Have Significant Economic Consequences

Displaced families, mainly from Syria, gather at Beirut's central Martyrs' Square, where they spent the night fleeing the overnight Israeli strikes in Beirut, Lebanon September 28, 2024. REUTERS/Louisa Gouliamaki
Displaced families, mainly from Syria, gather at Beirut's central Martyrs' Square, where they spent the night fleeing the overnight Israeli strikes in Beirut, Lebanon September 28, 2024. REUTERS/Louisa Gouliamaki
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IMF: Middle East Conflict Escalation Could Have Significant Economic Consequences

Displaced families, mainly from Syria, gather at Beirut's central Martyrs' Square, where they spent the night fleeing the overnight Israeli strikes in Beirut, Lebanon September 28, 2024. REUTERS/Louisa Gouliamaki
Displaced families, mainly from Syria, gather at Beirut's central Martyrs' Square, where they spent the night fleeing the overnight Israeli strikes in Beirut, Lebanon September 28, 2024. REUTERS/Louisa Gouliamaki

The International Monetary Fund said on Thursday that an escalation of the conflict in the Middle East could have significant economic ramifications for the region and the global economy, but commodity prices remain below the highs of the past year.

IMF spokesperson Julie Kozack told a regular news briefing that the Fund is closely monitoring the situation in southern Lebanon with "grave concern" and offered condolences for the loss of life.

"The potential for further escalation of the conflict heightens risks and uncertainty and could have significant economic ramifications for the region and beyond," Kozack said.

According to Reuters, she said it was too early to predict specific impacts on the global economy, but noted that economies in the region have already suffered greatly, especially in Gaza, where the civilian population "faces dire socioeconomic conditions, a humanitarian crisis and insufficient aid deliveries.

The IMF estimates that Gaza's GDP declined 86% in the first half of 2024, Kozack said, while the West Bank's first-half GDP likely declined 25%, with prospects of a further deterioration.

Israel's GDP contracted by about 20% in the fourth quarter of 2023 after the conflict began, and the country has seen only a partial recovery in the first half of 2024, she added.
The IMF will update its economic projections for all countries and the global economy later in October when the global lender and World Bank hold their fall meetings in Washington.
"In Lebanon, the recent intensification of the conflict is exacerbating the country's already fragile macroeconomic and social situation," Kozack said, referring to Israel's airstrikes on Hezbollah in Lebanon.
"The conflict has inflicted a heavy human toll on the country, and it has damaged physical infrastructure."
The main channels for the conflict to impact the global economy have been through higher commodity prices, including oil and grains, as well as increased shipping costs, as vessels avoid potential missile attacks by Yemen's Houthis on vessels in the Red Sea, Kozack said. But commodity prices are currently lower than their peaks in the past year.
"I just emphasize once again that we're closely monitoring the situation, and this is a situation of great concern and very high uncertainty," she added.
Lebanon in 2022 reached a staff-level agreement with the IMF on a potential loan program, but there has been insufficient progress on required reforms, Kozack said.
"We are prepared to engage with Lebanon on a possible financing program when the situation is appropriate to do so, but it would necessitate that the actions can be taken and decisive policy measures can be taken," Kozack added. "We are currently supporting Lebanon through capacity development assistance and other areas where possible."