International Monetary Fund published a Concluding Statement that describes the preliminary findings of IMF staff at the end of an official staff visit. Fund concludes that the KSA authorities “responded quickly and decisively to the COVID-19 crisis” and the economic recovery that is underway is expected by IMF experts to continue.
IMF projection that the Saudi Arabian economy will rise by almost 5% next year, as a result of the Kingdom’s decisive handling of the coronavirus pandemic, has been welcomed by economic experts, Arab News said.
Saudi Arabia’s economic recovery from the pandemic is on track, the IMF said. Economy is expected by the Fund to grow by 2.1% this year and 4.8% in 2022.
The Vision 2030 strategy has helped the Saudi economy beat the pandemic recession, with growth projected to rise to nearly 5 % in 2022, according to the latest assessment from the IMF.
In an upbeat analysis of the Kingdom’s prospects for recovery, the Fund said: “Reforms under Vision 2030 have played a key role in helping the economy navigate the pandemic”.
Growth in gross domestic product is estimated at 2.1 % in 2021, a 6.2 % turnaround from the sharp falls in economic activity suffered by Saudi Arabia and the rest of the world last year, before taking off in a sharp V-shaped recovery next year, when GDP will grow 4.8 %.
“The economic recovery is ongoing, the unemployment rate has fallen, and consumer price inflation is easing”, the Fund said.
Growth in the crucial non-oil sector highlighted as the avenue for future growth is expected to return to positive territory of 3.9 per cent this year and 3.6 per cent next year.
GDP in the oil sector is also expected to lift off next year, to 6.8 %, as the production cuts of the OPEC+ producers’ alliance end and with many experts predicting a surge in crude prices.
The IMF urged the Kingdom’s policymakers to quicken the pace of reforms. “Structural reforms should continue to be implemented to secure strong, sustained, inclusive, and greener growth,” the Fund said.
It also gave a seal of approval to recent policy initiatives to boost private sector involvement in the economy. “Public sector interventions can help overcome the reluctance of private companies to enter new or riskier sectors but need to be carefully implemented,” the Fund said.
In the whole analysis, we’ve found the most interesting paragraph 13 of the report. It says: «Investments and other policy measures are needed to support greener growth and reduce greenhouse gas (GHG) emissions. The Saudi Arabia Green Initiative is a welcome commitment from the leadership of the country to reduce GHG emissions, but more specific plans on how Saudi Arabia will meet its commitments are needed».
IMF experts state that in addition to continuing to reduce domestic energy price subsidies, stepped-up green investments that are being planned and implemented have the potential to boost growth and employment and reduce GHG emissions.
“The potential of renewable energy is large and should attract domestic and foreign investors given the right regulatory and financial environments” – experts conclude.
Finance Minister Mohammed Al-Jadaan said the report shows the success of the Kingdom’s government in achieving positive results during a global crisis.
“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 risen to,” he said.