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Standard & Poor’s Expects Saudi Economy to Grow by 3.4%

Inflation in the Kingdom remains under control and is expected to reach 2.7% in 2023, according to S&P Global. (SPA)
Inflation in the Kingdom remains under control and is expected to reach 2.7% in 2023, according to S&P Global. (SPA)
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Standard & Poor’s Expects Saudi Economy to Grow by 3.4%

Inflation in the Kingdom remains under control and is expected to reach 2.7% in 2023, according to S&P Global. (SPA)
Inflation in the Kingdom remains under control and is expected to reach 2.7% in 2023, according to S&P Global. (SPA)

Standard & Poor’s (S&P) maintained its credit rating for Saudi Arabia in local and foreign currencies at A/A-1 with a stable outlook, which it attributed to its expectations of the continuation of the government’s reform agenda in developing the non-oil sector, in addition to efforts to manage public finances and preserve a balanced level of public debt.

The agency said that the Kingdom would likely achieve annual growth in the next three years at a rate of 3.4 percent, supported by the expected high demand for oil and the noticeable growth in the non-oil sector. It added that inflation in Saudi Arabia has remained largely under control, noting that it was expected to reach 2.7 percent in 2023, and an average 2.3 percent in 2024-2026.

In its report, Standard & Poor’s said its rating is based on the country’s sustainable reform momentum in recent years, which included measures to enhance non-oil economic growth, supported by non-oil investments led by the Public Investment Fund (PIF), the expansion the non-oil tax base, and the large social liberalization.

“Reforms in the past few years, including measures to drive non-oil economic growth and widen the non-oil tax base, alongside significant social liberalization, should continue to improve Saudi Arabia’s economic and fiscal profile,” said S&P Global in the report.

The agency, however, said the Kingdom is expected to achieve a 0.2 percent growth in its gross domestic product for the current year, as a result of global economic conditions, including a slow recovery in China, which led to weak global oil demand in late 2022 and early 2023. On the other hand, it stressed that this decline in production is partially compensated for by the strong growth of non-oil GDP.

The S&P Global report pointed to Saudi Arabia’s continued efforts in recent years and its structural improvements that supported the sustainable development of the non-oil sector. It added that the Kingdom’s prudent management of public finances and maintaining a balanced public debt level have also contributed to this rating.

Standard & Poor’s expected the budget to return to achieving surpluses averaging 1 percent of GDP between 2024 and 2026 after a deficit in 2023, due to the reduction in oil production. It also said the total general government debt is likely to reach an average of 25 percent of GDP in 2023-2026.

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Fire, Smoke Upend Western Canada’s Summer Tourism Season

A helicopter works a forest fire outside of Jasper, Alberta, Canada, on Friday July 26, 2024. (Reuters)
A helicopter works a forest fire outside of Jasper, Alberta, Canada, on Friday July 26, 2024. (Reuters)
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Fire, Smoke Upend Western Canada’s Summer Tourism Season

A helicopter works a forest fire outside of Jasper, Alberta, Canada, on Friday July 26, 2024. (Reuters)
A helicopter works a forest fire outside of Jasper, Alberta, Canada, on Friday July 26, 2024. (Reuters)

Severe wildfire seasons are increasingly hurting western Canada's lucrative tourism industry, with some visitors beginning to avoid the busy late-summer months due to concerns about uncontrolled blazes, smoke-filled skies and road closures.

After a scorching start to July, nearly 600 wildfires are now ablaze across British Columbia and Alberta, including a huge fire that this week devastated the picturesque tourist town of Jasper in the Canadian Rockies.

Dozens of communities, including popular holiday spots in British Columbia's Kootenay region, are under evacuation orders and several highways are closed.

This year's surge in wildfire activity comes after Canada endured its worst-ever year for wildfires in 2023, when more than 15 million hectares (37 million acres) burned, including parts of the city of West Kelowna in the heart of British Columbia's wine region.

Ellen Walker-Matthews, head of the Thompson Okanagan Tourism Association, said the industry was seeing a lot more last-minute travel decisions instead of booking in advance.

"It's a huge blow. July and August are traditionally the busiest months in the region," said Walker-Matthews, adding that while her region has been relatively unscathed by wildfires this summer, some visitors are choosing to avoid interior British Columbia altogether.

The members of the British Columbia Lodging and Campgrounds Association are reporting a 5-15% drop in bookings from a year ago, with the biggest declines coming from the hotter Okanagan and Cariboo regions, said Joss Penny, who heads the association.

"The concern is that this is something we have to live with and we have it every year now," said Penny.

Although wildfires in Canada's forests are natural and common, scientists say drier, hotter conditions fueled by climate change are leading to more volatile and frequent blazes.

'SMOKEY SKIES'

Some events, like the Salmon Arm Roots and Blues Festival, usually held in August, have now been rescheduled to earlier in the summer to avoid what is now seen as peak smoke season. The festival, which was cancelled last year due to nearby wildfires, was this year moved to July to benefit from "less smokey skies."

Wildfires and extreme climatic events are prompting tourists to "change their plans not just temporarily, but permanently," said Elizabeth Halpenny, a tourism researcher and professor at the University of Alberta, noting that seasonal workers in the sector are often the hardest hit as they have few protections during a bad season or amid a cataclysmic fire.

Tourism contributed C$7.2 billion to the British Columbia economy in 2022, and C$9.9 billion to Alberta in 2023, according to the latest government data.

Jasper National Park is one of Canada's premier tourist destinations, with more than 2 million visitors a year flocking to see its pristine mountain landscapes and abundant wildlife, including grizzly bears, moose and elk.

Kelly Torrens, vice-president of product at international tour company Kensington Tours, described western Canada as a bucket-list destination. But the company now has 49 trips that were supposed to pass through Jasper this season in limbo. Six others were forced to evacuate the park when the fire hit.

Parks Canada has cancelled all camping reservations within Jasper National Park until Aug. 6 and with potentially 50% of the town's structures destroyed by fire, the cleanup and rebuild could take years.

Halpenny is among those hedging their bets.

"I've booked a campsite stay in the mountain parks but at the same time, I booked a campsite out on the prairie somewhere and that's my backup plan because I don't want to miss out on my vacation with my family."