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Saudi Arabia’s successful economic reforms, as well as an expected decline in the jobless rate and inflation, were underscored in a concluding statement issued as part of the preliminary findings of International Monetary Fund (IMF) staff at the end of a recent official visit to the Kingdom.
The IMF staff forecast that real gross domestic product (GDP) will grow by 2.1 percent this year and by 4.8 percent in 2022 (compared with a 4.1 percent contraction in 2020).
The statement indicated that non-oil GDP will grow by 3.9 this year and 3.6 percent in 2022, compared with a decline of 2.3 percent in 2020.
In light of production levels agreed by OPEC+, the IMF staff projected that real oil GDP growth will contract by 0.5 percent this year (compared with a contraction of 6.7 percent in 2020), but grow by 6.8 percent in 2022, as oil supplies return to normal. Despite the negative growth in the real oil GDP in 2021, it is projected to show significant improvement this year and next.
The IMF mission praised the Saudi government’s successful efforts to contain the spread of the coronavirus disease (COVID-19), especially its rollout of the vaccination campaign, which in recent months has exceeded 10 million doses.
It also commented on the effective role of fiscal policies, and financial sector and employment initiatives launched by the government.
The Saudi Central Bank efforts, in connection with supporting the private sector, were viewed positively by the IMF mission, especially the programs designed to provide breathing space for small and medium-size enterprises.
Efforts with regard to labor market reforms were also highlighted by the IMF, since these have resulted in a significant increase in female labor force participation and should enhance job mobility for expatriates working in the private sector. In addition, the statement welcomed the Saudi Green Initiative and its potential in boosting growth and employment, as well as reducing greenhouse gas emissions.
Also, the statement commended the impressive pace of reforms in the equity and debt markets taken by the Saudi Capital Market Authority and the National Debt Management Center, which contributed to increasing the capital raising and investment options available to companies in the Kingdom.
The IMF concluding statement also commended the Kingdom’s strong economic fundamentals supported by Vision 2030, which enabled establishing robust governance and cooperation between ministries and entities.
Mohammed Al-Jadaan, the Saudi finance minister, said that “the statement reaffirms the success of the Kingdom’s government in achieving positive results and tangible successes during the most challenging year for the whole world.” He further added that “such results have been achieved despite the impact of the COVID-19 pandemic, fluctuations in oil prices, sharp economic fluctuations, declining in global demand, receding growth and other challenges that the Saudi government has faced.” I agree with the preliminary findings of the IMF’s mission, especially when considering that the positive economic achievements happened at a difficult period during the COVID-19 pandemic.
I also believe that these positive achievements would have not happened without the commitment of the Saudi government to continue its economic and social reforms programs, despite the challenges.
Talat Zaki Hafiz is an economist and financial analyst.
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