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July 2022

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ECONOMIC TRENDS

 

Female participation in the kingdom’s workforce continues to grow, further helping to boost the economy and reduce unemployment rate.

VISION 2030

 

The approval of a new law is expected to give fresh impetus to the kingdom’s privatisation initiatives, which is a crucial element of the Vision 2030 agenda.

GCC MARKET

 

Collectively, Tadawul and its neighbouring bourses have performed much better than their international counterparts, as regional investors are buoyed by strong economic recovery and high oil prices.

TOURISM

 

Latest efforts to revive the tourism industry have gained the recognition of an international body tracking the economic impact of the sector.

SME

 

Government-initiated financing has encouraged more Saudis to explore the entrepreneurial route, and the trend is expected to grow.

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 IN THIS EDITION

Saudi Arabia’s sound management of COVID-19 and prudent use of its financial resources have placed it in a very favourable position. The International Monetary Fund notes that liquidity and fiscal support, reform momentum, and high oil prices and production have helped the country recover.

High vaccination rates and a relatively subdued Omicron COVID-19 wave ensured that the economy has weathered the crisis deftly.

“The near and medium-term outlook for Saudi Arabia is positive as growth is picking up, inflation will remain contained, and the external position will strengthen further,” the IMF said in its latest report on the kingdom.

High oil production that is in line with OPEC+ policies, and the ambitious reform agenda under Vision 2030, will mean that overall GDP is projected to grow by 7.6% in 2022 despite an expected monetary policy tightening in the next few months, and central government fiscal consolidation going forward, the IMF said. 

“Non-oil growth will increase to 4.2% in 2022 before returning to its medium-term potential as the output gap closes and investment projects and reforms continue to yield returns.”

Saudi Arabia’s limited trade ties with Russia and Ukraine, should help shield it from adverse impacts, while high commodity prices will remain a source of strength.

The IMF recommended that Saudi authorities should persist with Vision 2030 reforms and maintain fiscal discipline, especially in light of inflation pressures. Debt management and capital market development are other critical elements to ensure deep and sound fiscal reforms.

Encouraging private sector will also be critical to ensuring the success of Vision 2030.

According to the Saudi General Authority for Statistics, the first quarter saw a 9.9% growth, compared to the same period last year, with the non-oil economy posting impressive 2.6% gains during the period. With Saudi Arabia's fiscal performance showing signs of sustained growth, and oil prices at elevated levels, expect the economy to perform well over the next few quarters.
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