Riyadh, Saudi Arabia

 

Now

Saudi Arabia is poised to become one of the world’s fastest-growing economies this year, thanks to extensive pro-business reforms, a surge in oil prices and production, and a recovery from the recession caused by the pandemic in 2020. The country is expected to experience a remarkable GDP growth rate of 7.6%, the highest in nearly a decade.

The central bank of Saudi Arabia is tightening its monetary policy, resulting in controlled inflation of 2.8% in 2022, despite the increased prices of imported goods. With the rise in non-oil revenue and oil export earnings, the nation’s external position and public finances will witness significant improvements, and ample reserve buffers will be maintained.

Even though oil revenues are rising, it will be crucial to keep control of demand, but there is room for more targeted social spending. To support fiscal consolidation on a governmental level, improvements in tax policy would increase taxes from activities other than oil. The financial sector remains resilient and systemic risks are low with strong central bank supervision.

The Future?

In the context of high oil prices and mass liquidity, it is expected that increases in interest rates by the FED will have only a limited effect on the Saudi economy. To keep risks from happening, it’s important to keep working to make the framework for regulation of the financial sector better and to keep an eye on how much more mortgages are being given out.

The sovereign wealth fund of Saudi Arabia, the Public Investment Fund, should continue prioritizing high returns and encouraging increased private sector participation as it implements “projects” aimed at driving economic growth. If Saudi Arabia continues to embraces these favorable economic conditions, maintains fiscal discipline, and pursues sustainable strategies, the country is positioned for continued growth and a more resilient and diversified economy.

Look below for more info: 

https://www.imf.org/en/News/Articles/2022/08/09/CF-Saudi-Arabia-to-grow-at-fastest-pace