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Experts to Asharq Al-Awsat: IMF Indicators Confirm Saudi Arabia’s Continued Income Diversification

The Saudi capital, Riyadh, on November 15, 2024. (Reuters)
The Saudi capital, Riyadh, on November 15, 2024. (Reuters)
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Experts to Asharq Al-Awsat: IMF Indicators Confirm Saudi Arabia’s Continued Income Diversification

The Saudi capital, Riyadh, on November 15, 2024. (Reuters)
The Saudi capital, Riyadh, on November 15, 2024. (Reuters)

Experts told Asharq Al-Awsat that the International Monetary Fund’s (IMF) latest report on Saudi Arabia’s economy - highlighting positive indicators across all sectors - is strong evidence that the Saudi government is continuing its strategy to diversify income sources.

This diversification is designed to maintain a resilient economy capable of withstanding external shocks. They added that the Kingdom is pressing ahead with comprehensive structural reforms to ensure steady growth in the non-oil sector.

The IMF Executive Board concluded its Article IV consultations on Monday, stating that the Saudi economy has witnessed broad recovery across sectors. Experts noted that Saudi Arabia’s ongoing mega-projects are expected to generate further revenues and bolster economic strength.

Shura Council member Fadl bin Saad Al-Buainain told Asharq Al-Awsat that the IMF’s recognition of Saudi Arabia’s economic flexibility and diversity reflects the success of Vision 2030, which focuses on economic diversification and improved efficiency.

Although diversification is still evolving, it has already contributed significantly to financial stability despite fluctuating oil markets, he noted.

The government continues to strengthen its foreign currency reserves to support monetary stability. Al-Buainain highlighted that foreign reserves reached $414.5 billion by the end of 2024. Moreover, non-oil real GDP growth of 4.5% during the year indicates the effectiveness of the Kingdom’s diversification strategies.

This growth has also impacted labor market reforms, including reducing the unemployment rate to a historic low of 7% and raising female workforce participation to 36% by the end of 2024, key goals under Vision 2030. In housing, ownership rates rose to 65.4% in 2024, up from 47% in 2016, which Al-Buainain attributed to successful government policies.

Tourism has emerged as a major beneficiary of economic reforms. The number of local and international visitors surged from 63 million in 2016 to 115.9 million in 2024.

Al-Buainain also pointed to the strength of Saudi banks, which play a central role in supporting private sector growth and funding non-oil projects. Low rates of non-performing loans and solid profitability reflect the sector’s stability.

Although public debt has decreased to 26.2% of GDP - among the lowest in the G20 - he stressed the need to manage debt levels carefully, especially given global economic and geopolitical risks. The government, he said, is now prioritizing projects based on financial capacity and economic returns, aiming to reduce spending pressure and stimulate long-term growth.

Economist Ahmed Al-Shahri echoed the report’s emphasis on sustaining the momentum of reforms initiated in 2016, regardless of oil price trends. He underlined growth across all sectors, including tourism, labor market participation, and foreign investment, all underpinned by strong banking and controlled inflation.

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IMF and Arab Monetary Fund Sign MoU to Enhance Cooperation

The MoU was signed by IMF Managing Director Dr. Kristalina Georgieva and AMF Director General Dr. Fahad Alturki - SPA
The MoU was signed by IMF Managing Director Dr. Kristalina Georgieva and AMF Director General Dr. Fahad Alturki - SPA
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IMF and Arab Monetary Fund Sign MoU to Enhance Cooperation

The MoU was signed by IMF Managing Director Dr. Kristalina Georgieva and AMF Director General Dr. Fahad Alturki - SPA
The MoU was signed by IMF Managing Director Dr. Kristalina Georgieva and AMF Director General Dr. Fahad Alturki - SPA

The International Monetary Fund (IMF) and the Arab Monetary Fund (AMF) signed a memorandum of understanding (MoU) on the sidelines of the AlUla Conference on Emerging Market Economies (EME) to enhance cooperation between the two institutions.

The MoU was signed by IMF Managing Director Dr. Kristalina Georgieva and AMF Director General Dr. Fahad Alturki, SPA reported.

The agreement aims to strengthen coordination in economic and financial policy areas, including surveillance and lending activities, data and analytical exchange, capacity building, and the provision of technical assistance, in support of regional financial and economic stability.

Both sides affirmed that the MoU represents an important step toward deepening their strategic partnership and strengthening the regional financial safety net, serving member countries and enhancing their ability to address economic challenges.

Business

Saudi Chambers Federation Announces First Saudi-Kuwaiti Business Council

File photo of the Saudi flag/AAWSAT
File photo of the Saudi flag/AAWSAT
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Saudi Chambers Federation Announces First Saudi-Kuwaiti Business Council

File photo of the Saudi flag/AAWSAT
File photo of the Saudi flag/AAWSAT

The Federation of Saudi Chambers announced the formation of the first joint Saudi-Kuwaiti Business Council for its inaugural term (1447–1451 AH) and the election of Salman bin Hassan Al-Oqayel as its chairman.

Al-Oqayel said the council’s formation marks a pivotal milestone in economic relations between Saudi Arabia and Kuwait, reflecting a practical approach to enabling the business sectors in both countries to capitalize on promising investment opportunities and strengthen bilateral trade and investment partnerships, SPA reported.

He noted that trade between Saudi Arabia and Kuwait reached approximately SAR9.5 billion by the end of November 2025, including SAR8 billion in Saudi exports and SAR1.5 billion in Kuwaiti imports.

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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).
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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.