RIYADH: Saudi Arabia’s fiscal prospects are solid in the near term, primarily driven by Vision 2030 which has been steadily diversifying the Kingdom’s economy since its launch in 2016, according to the International Monetary Fund.
In a press statement, the IMF noted that Saudi Arabia was the fastest-growing economy among G20 countries, achieving an overall growth rate of 8.7 percent.
According to the financial agency, the Kingdom has sufficient precautionary reserves and the peg of the exchange rate to the US dollar is serving the Saudi economy well.
HIGHLIGHT
Affirming the progress of Saudi Arabia’s sustainability journey, the IMF lauded the Kingdom’s efforts to reduce carbon emissions, in line with its target to achieve net zero by 2060.
While much of the world has suffered from inflationary pressures, Saudi Arabia succeeded in maintaining its average consumer price index, the IMF said.
“Despite an uptick in early 2023 to 3.4 percent year on year, headline inflation is back at 2.8 percent year on year in May 2023, as declining contributions from transport and food prices offset the substantial increase in rent,” said the IMF.
In line with its economic diversification goals, the Kingdom is spearheading the energy transition journey in the region through various initiatives such as the Saudi Green Initiative, and the wider Middle East Green Initiative.
Affirming the progress of Saudi Arabia’s sustainability journey, the IMF lauded the Kingdom’s efforts to reduce carbon emissions, in line with its target to achieve net zero by 2060.
The executive board of the IMF also welcomed the non-oil revenue mobilization efforts undertaken by the Saudi government as a part of the Kingdom’s Vision 2030.
The agency also emphasized that the strength and flexibility of the banking system in the Kingdom are contingent upon the continuous development of the sector’s infrastructure and the modernization of regulatory and supervisory frameworks.
This is further connected to the comfortable levels of liquidity that the banking system in Saudi Arabia enjoys, as well as the rapid digital transformation. Moreover, the IMF clarified that the system has not experienced direct repercussions from the banking crisis in the US and Europe.
In 2022, Saudi Arabia’s non-oil gross domestic product witnessed a growth of 4.8 percent driven by robust private consumption and investments in various sectors like wholesale, retail trade, constriction and transport, the IMF added.
It also predicted that the non-oil GDP of Saudi Arabia will further grow by 4.9 percent in 2023 fueled by strong consumption spending.
In August, a report released by the General Authority for Statistics revealed that Saudi Arabia’s inflation rate further fell to 2.3 percent in July from 2.7 percent in June.
The IMF also lauded Saudi Arabia’s success in reducing the unemployment rate to historical lows, reaching 8 percent in 2022, increasing the female workforce and strengthening the Kingdom’s banking sector.
The efforts taken by the Saudi Central Bank, also known as SAMA to promote the Kingdom as a fintech hub was also welcomed.
