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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)
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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.

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Business

Leading Harvard Trade Economist Says Saudi Arabia Holds Key to Success in Fragmented Global Economy

Professor Pol Antràs speaks during a panel discussion at the AlUla Conference for Emerging Market Economies (Asharq Al-Awsat).
Professor Pol Antràs speaks during a panel discussion at the AlUla Conference for Emerging Market Economies (Asharq Al-Awsat).
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Leading Harvard Trade Economist Says Saudi Arabia Holds Key to Success in Fragmented Global Economy

Professor Pol Antràs speaks during a panel discussion at the AlUla Conference for Emerging Market Economies (Asharq Al-Awsat).
Professor Pol Antràs speaks during a panel discussion at the AlUla Conference for Emerging Market Economies (Asharq Al-Awsat).

Harvard University economics professor Pol Antràs said Saudi Arabia represents an exceptional model in the shifting global trade landscape, differing fundamentally from traditional emerging-market frameworks. He also stressed that globalization has not ended but has instead re-formed into what he describes as fragmented integration.

Speaking to Asharq Al-Awsat on the sidelines of the AlUla Conference for Emerging Market Economies, Antràs said Saudi Arabia’s Vision-driven structural reforms position the Kingdom to benefit from the ongoing phase of fragmented integration, adding that the country’s strategic focus on logistics transformation and artificial intelligence constitutes a key engine for sustainable growth that extends beyond the volatility of global crises.

Antràs, the Robert G. Ory Professor of Economics at Harvard University, is one of the leading contemporary theorists of international trade. His research, which reshaped understanding of global value chains, focuses on how firms organize cross-border production and how regulation and technological change influence global trade flows and corporate decision-making.

He said conventional classifications of economies often obscure important structural differences, noting that the term emerging markets groups together countries with widely divergent industrial bases. Economies that depend heavily on manufacturing exports rely critically on market access and trade integration and therefore face stronger competitive pressures from Chinese exports that are increasingly shifting toward alternative markets.

Saudi Arabia, by contrast, exports extensively while facing limited direct competition from China in its primary export commodity, a situation that creates a strategic opportunity. The current environment allows the Kingdom to obtain imports from China at lower cost and access a broader range of goods that previously flowed largely toward the United States market.

Addressing how emerging economies should respond to dumping pressures and rising competition, Antràs said countries should minimize protectionist tendencies and instead position themselves as committed participants in the multilateral trading system, allowing foreign producers to access domestic markets while encouraging domestic firms to expand internationally.

He noted that although Chinese dumping presents concerns for countries with manufacturing sectors that compete directly with Chinese production, the risk is lower for Saudi Arabia because it does not maintain a large manufacturing base that overlaps directly with Chinese exports. Lower-cost imports could benefit Saudi consumers, while targeted policy tools such as credit programs, subsidies, and support for firms seeking to redesign and upgrade business models represent more effective responses than broad protectionist measures.

Globalization has not ended

Antràs said globalization continues but through more complex structures, with trade agreements increasingly negotiated through diverse arrangements rather than relying primarily on multilateral negotiations. Trade deals will continue to be concluded, but they are likely to become more complex, with uncertainty remaining a defining feature of the global trading environment.

Interest rates and artificial intelligence

According to Antràs, high global interest rates, combined with the additional risk premiums faced by emerging markets, are constraining investment, particularly in sectors that require export financing, capital expenditure, and continuous quality upgrading.

However, he noted that elevated interest rates partly reflect expectations of stronger long-term growth driven by artificial intelligence and broader technological transformation.

He also said if those growth expectations materialize, productivity gains could enable small and medium-sized enterprises to forecast demand more accurately and identify previously untapped markets, partially offsetting the negative effects of higher borrowing costs.

Employment concerns and the role of government

The Harvard professor warned that labor markets face a dual challenge stemming from intensified Chinese export competition and accelerating job automation driven by artificial intelligence, developments that could lead to significant disruptions, particularly among younger workers. He said governments must adopt proactive strategies requiring substantial fiscal resources to mitigate near-term labor-market shocks.

According to Antràs, productivity growth remains the central condition for success: if new technologies deliver the anticipated productivity gains, governments will gain the fiscal space needed to compensate affected groups and retrain the workforce, achieving a balance between addressing short-term disruptions and investing in long-term strategic gains.

Business

Aljadaan: Emerging Markets Account for 70% of Global Growth

Al-Jadaan speaking to the attendees at the "AlUla Conference for Emerging Market Economies" (Asharq Al-Awsat
Al-Jadaan speaking to the attendees at the "AlUla Conference for Emerging Market Economies" (Asharq Al-Awsat
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Aljadaan: Emerging Markets Account for 70% of Global Growth

Al-Jadaan speaking to the attendees at the "AlUla Conference for Emerging Market Economies" (Asharq Al-Awsat
Al-Jadaan speaking to the attendees at the "AlUla Conference for Emerging Market Economies" (Asharq Al-Awsat

Saudi Minister of Finance Mohammed Aljadaan stressed Sunday that the world economy is going through a “profound transition,” saying emerging markets and developing economies now account for nearly 60 percent of the global Gross Domestic Product (GDP) in purchasing power terms and over 70 percent of global growth.

In his opening remarks at the AlUla Conference for Emerging Market Economies, organized by the Saudi Ministry of Finance and the IMF in AlUla, the minister said these economies have become an increasingly important driver of global growth with their share of global economy more than doubling since 2010.

“Today, the 10 emerging economies in the G20 alone account for more than half of the world growth. Yet, they face a more complex and fragmented environment, elevated debt levels, slower trade growth and increasing exposure to geopolitical shocks.”

“Unfortunately, more than half of low income countries are either in or at the risk of debt distress. At the same time global trade growth has slowed at around half of what it was pre the pandemic,” Aljadaan added.

The Finance Minister stressed that the Saudi experience over the past decade has reinforced three lessons that may be relevant to the discussions at the two-day conference, which brings together a select group of ministers and central bank governors, leaders of international organizations, leading investors and academics.

“First, macroeconomic stability is not the enemy of growth. It is actually the foundation,” he said.

“Structural reforms deliver results only when institutions deliver. So there is no point of reforming ... if the institutions are unable to deliver,” he stated.

Finally, he said that “international cooperation matters more, not less, in a fragmented world.”

Business

Georgieva from AlUla: Growth Still Lacks Pre-pandemic Levels

Kristalina Georgieva speaking to attendees at the second edition of the AlUla Conference for Emerging Market Economies (Asharq Al-Awsat)
Kristalina Georgieva speaking to attendees at the second edition of the AlUla Conference for Emerging Market Economies (Asharq Al-Awsat)
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Georgieva from AlUla: Growth Still Lacks Pre-pandemic Levels

Kristalina Georgieva speaking to attendees at the second edition of the AlUla Conference for Emerging Market Economies (Asharq Al-Awsat)
Kristalina Georgieva speaking to attendees at the second edition of the AlUla Conference for Emerging Market Economies (Asharq Al-Awsat)

International Monetary Fund (IMF) Managing Director Kristalina Georgieva said Sunday that world growth still lacks pre-pandemic levels, expressing concern as she expected more shocks amid high spending and rising debt levels in many countries.

Georgieva spoke at the AlUla Conference for Emerging Market Economies, organized by the Saudi Ministry of Finance and the IMF in AlUla.

The two-day conference brings together a select group of ministers and central bank governors, leaders of international organizations, leading investors and academics to deliberate on policies to global stability, prosperity, and multilateral collaboration.

Georgieva said that the conference was launched last year in recognition of the growing role of emerging market economies in a world of sweeping transformations.

“I came out of this gathering .... With a sense of hope for the pragmatic attitude and determination to pursue good policies and build strong institutions,” she said.

Georgieva stressed that “good policies pay off,” and said that growth rates across emerging economies reached four percent this year, exceeding by a large margin those of advanced economies that are around 1.5 percent.