The International Monetary Fund (IMF) has released a favorable report shedding light on Saudi Arabia’s robust economy, growth, and prosperity. Following their 2023 Article IV Consultation discussions with the Kingdom, the IMF underscored several vital aspects, affirming the nation’s economic well-being and growth, highlighted by a robust fiscal position.
Highlighting Saudi Arabia’s Economic Achievements: The IMF commended Saudi Arabia’s economic accomplishments, explicitly focusing on their record-breaking GDP, declining unemployment rates, and the remarkable rise in women’s participation in the workforce. As the discussions with the Kingdom concluded, the IMF emphasized that the Saudi economy is flourishing and on a sustained growth trajectory.
IMF Applause for the Saudi Economy: Additionally, the IMF applauded Saudi Arabia’s substantial strides in executing its ambitious Saudi Vision 2030 reform agenda. They also commended the Kingdom’s accelerated digital transformation, the surge in female labor force participation, reforms in regulatory and business environments, ongoing investments in human capital, and the continuous expansion of non-oil GDP. The report lauded the Kingdom’s unwavering commitment to continued economic and financial reforms and its dedication to achieving the objectives set forth in Saudi Vision 2030.
Key Achievements Highlighted:
- GDP Growth:Saudi Arabia claimed the title of the fastest-growing G20 economy in 2022, boasting an impressive growth rate of 8.7%, with non-oil GDP expanding by approximately 4.8%.
- Low Unemployment:The report highlighted historically low unemployment rates among Saudi nationals, currently at 8%.
- Women’s Workforce Participation:Saudi Arabia achieved record levels of female labor force participation, reaching around 37%, exceeding the 30% target outlined in Saudi Vision 2030 (up from 18% in 2017).
Efforts to Empower Women and Manage Inflation: The report also warmly welcomed ongoing national initiatives to enhance women’s contributions to bolster the national economy. Furthermore, it praised Saudi Arabia’s proactive measures to contain inflation, which posed global economic challenges. The containment was achieved through domestic subsidies and price caps on select products, in addition to the strength of the US dollar, leading to a consumer price index (CPI) of just 2.5% in 2022. While the average index briefly increased to 3.4% in early 2023, it decreased to 2.8% by May 2023.
Saudi Vision 2030: Economic Diversification and Fiscal Sustainability: The IMF report underscored that the ongoing implementation of Saudi Vision 2030 reforms signifies substantial progress toward advancing the nation’s economic diversification endeavors, thus diminishing its reliance on oil revenue. The IMF projected a consistent upswing in non-oil GDP growth, with an estimated average % growth rate of 4.9% in 2023. This surge would be propelled by robust consumption spending, increased private investments in projects and programs designed to nurture the private sector’s growth, and the swift execution of critical tasks.
Fiscal Sustainability and Monetary Policy: The report also expressed appreciation for the ongoing reform efforts within the framework of the Fiscal Sustainability Program. This includes enhancements in non-oil revenues, rationalized spending practices, and reinforcing the public finance framework. Notably, the IMF acknowledged Saudi Arabia’s low and sustainable debt levels and a robust fiscal reserve. It also praised the substantial progress in enhancing public finance transparency through expanded budget statements and detailed reports. Furthermore, the IMF affirmed that Saudi Arabia’s monetary policy, characterized by a fixed exchange rate, is aptly aligned with the nation’s economic goals. It highlighted the enduring strength of the banking sector, attributing its performance to the Saudi Central Bank’s (SAMA) continuous modernization of regulatory and supervisory frameworks. This contributed to achieving high profitability rates, surpassing pre-pandemic levels, impressive capital adequacy ratios, and minimal non-performing loan ratios.
The report applauded the Saudi Central Bank’s efforts in establishing the Kingdom as a fintech hub.
It commended the government’s ongoing endeavors to improve governance, combat corruption, and address climate change challenges.
The report praised initiatives to boost renewable energy, the Kingdom’s aspiration to lead in clean hydrogen production, and the tangible impact of the Saudi Green Initiative (SGI) in reducing carbon emissions. It anticipated emissions reduction in line with the 2030 target, highlighting the Kingdom’s second-lowest emissions per unit produced globally.
Regarding the housing sector, the report noted transformative programs that elevated home ownership to 60.6% in 2022, aligning with the Vision 2030 goal of 70% by 2030.
Industrial policies were recognized as vital for the Kingdom’s structural transformation and diversification under Saudi Vision 2030.
In the digital realm, the report highlighted the Kingdom’s prominent position in global digitization rankings, citing achievements in digital infrastructure and government transformation maturity. Saudi Arabia’s robust digital development bolstered financial inclusion, financial sector resilience, and government efficiency, with Saudi Vision 2030 playing a pivotal role.
Finance Minister Mohammed Aljadaan welcomed the IMF report’s acknowledgment of Saudi economic reforms and ongoing efforts. He emphasized the Kingdom’s solid fiscal position, improved public finance transparency, and supportive financial policies and reforms.
Aljadaan noted the report’s positive outlook for the Saudi economy, highlighting continuous progress in Saudi Vision 2030 implementation and economic transformation.
The IMF emphasized the Kingdom’s economic resilience, attributed to government-led economic and structural reforms, fostering sustainable and inclusive growth.
Source: Arabian Business