Saudi Arabia’s economy is set to grow at the quickest pace in a decade and will likely be one of the world’s fastest-growing economies this year, according to the International Monetary Fund.
Sweeping pro-business reforms implemented by the country, together with a sharp rise in oil prices and increased crude production, have powered the kingdom’s recovery from the pandemic-induced recession in 2020, the IMF said on Wednesday.
“The authorities’ continued implementation of Vision 2030 policies will help diversify and liberalise the economy and thus pave the way to more stable growth,” Amine Mati, an IMF assistant director and Sidra Rehman, an economist at the fund, said.
Saudi Arabia’s gross domestic product is forecast to expand 7.6 per cent this year after 3.2 per cent growth in 2021, the IMF said in its World Economic Outlook update last month.
The World Bank expects the country's economic output to increase 7 per cent, while Jadwa Investment estimates the kingdom's economic growth at 7.7 per cent in 2022.
Saudi Arabia’s economy, the largest in the Arab world, grew 11.8 per cent in the second quarter of 2022, with oil-related economic activity in the kingdom rising 23.1 per cent annually. Non-oil economic activity climbed 5.4 per cent during the period, according to government data released in July.
Oil prices have remained volatile this year amid the Russia-Ukraine conflict. Brent, the global benchmark for two-thirds of the world's oil that rose 67 per cent last year, has come off its recent highs amid concerns for demand outlook. It is, however, still about 20 per cent higher than at the beginning of this year.
Despite a sharp rise in prices of imported commodities, inflation in Saudi Arabia will remain contained at 2.8 per cent in 2022, as the central bank tightens policy in line with the US Federal Reserve, the IMF said on Wednesday.
Consumer prices in Saudi Arabia increased by 2.7 per cent on an annual basis in July, higher than the 2.3 per cent rate of inflation recorded in June, Saudi Arabia’s General Authority for Statistics said last week.
Inflation globally has risen sharply, driven by a steep increase in the prices of food and other commodities amid the war in Ukraine. However, it has been significantly lower in the GCC than in most advanced and emerging market countries amid improved economic activity.
Source: The National
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