The International Monetary Fund (IMF) kept its economic growth projection for Saudi Arabia unchanged on Wednesday, despite continued worries that the world economy may be entering a recession.
The IMF predicted that Saudi Arabia’s economy would still expand by 7.6% this year, making it one of the highest growth rates in the world. This was made possible by robust oil demand and the 4.2% forecast increase in the country’s non-oil sector.
According to the IMF, Saudi Arabia’s inflation, which is projected to be 2.8% this year, was under control and the effects of Russia’s invasion of Ukraine had little impact on the country.
The government of Saudi Arabia expects economic growth of 7.4% this year. The world’s largest oil exporter, Saudi Arabia, has been able to replenish state finances damaged by the COVID-19 epidemic because of an increase in oil demand. According to government representatives, the kingdom would limit expenditure and save money rather than allowing oil price booms to fuel spending as in the past.
Even while the IMF stated in its assessment that there was room for more targeted social expenditure to lessen the impact of growing expenses on the kingdom’s low-income inhabitants, IMF Mission Chief Amine Mati told Reuters that he anticipated Saudi Arabia would maintain control over spending.
According to Mati, the kingdom’s anticipated budget surplus of 5.5% of GDP this year, which would be it’s first since 2013, would amount to about 211 billion riyals ($56.21 billion). In 2020, Saudi Arabia quadrupled their VAT to 15% as the pandemic reduced oil earnings but subsequently indicated that the rate would be cut. According to Mati, the IMF thought Saudi Arabia should keep the rate at 15% and should think about taxing income and property as a way to boost its non-oil sector earnings. In July, the IMF lowered its projections for global growth, citing growing risks from rising inflation and the conflict in Ukraine that, if uncontrolled, may bring the global economy dangerously close to a recession. According to the IMF, the kingdom’s real GDP is expected to rise by 3.7% next year and its non-oil GDP by 3.8%.
(1 dollar = 3.7541 riyals)
According to early estimates, Saudi Arabia’s gross domestic product increased by 11.8 percent annually in the second quarter of 2022, picking up speed from the quarter before, when it increased by 9.9 percent. It was the GDP’s greatest expansion since the third quarter of 2011, and it was driven by an increase in oil activity of 23.1%. Additionally, non-oil activities increased by 5.4%, while government service activities increased by 2.2%. On a quarterly basis, seasonally adjusted figures show that the Saudi GDP increased by 1.8 percent, driven by increases in the oil sector (4.8 percent) and government services (0.2%), while non-oil activity fell by 0.4 percent.
The largest oil producer in the world is Saudi Arabia, where oil production makes up 46% of the country’s GDP. Government services (13%) are included in the services sector along with wholesale and retail commerce, lodging and dining (8%), and financial, insurance, and real estate services (36%). (7.9 percent). Other industries include manufacturing (10%), construction, and the provision of electricity, gas, and water (6%), as well as agriculture, forestry, and fishing (2 percent).
Saudi Arabia’s Q1 GDP Growth is Now 9.9%
Compared to the reported number of a 9.6% increase and following a final 6.7% growth in Q4, the Saudi Arabian GDP expanded by 9.9% year over year in the first quarter of 2022. It was the strongest growth in GDP since the third quarter of 2011, and it was the fourth consecutive quarter of growth. The primary driver of this growth was a 20.3% increase in oil-related activities, which came about as a result of rising global demand for crude oil and an increase in Saudi production. While non-oil activities increased by 3.7%, wholesale and retail commerce, restaurants, and hotels saw the largest growth (6.3%), followed by transport, storage, and communication (5.9%) and finance, insurance, and business services (4.2%).
The Saudi economy has grown the most since 2011.
According to early projections, Saudi Arabia’s gross domestic product increased 9.6% year over year in the first quarter of 2022. That would mark the greatest expansion since 2011, which saw a rise in oil activity of 20.4%. Government services activities increased by 2.4 percent, while non-oil activities increased by 3.7 percent as well. Seasonally adjusted for the quarter, the Saudi GDP increased by 2.2 percent as a result of rising non-oil (2.5 percent) and oil (2.9 percent) activity, while government services activities fell by 0.9 percent.
Revisions to Saudi Arabia’s Q4 GDP Growth Drop to 6.7%
After a final 7.0% advance in Q3, which was the biggest growth since Q1 2012, and a flash figure of a 6.8% expansion in Q4 2021, the Saudi Arabian GDP expanded by 6.7% year over year. It was the third quarter in a row that the GDP increased, mostly due to an increase of 10.9% in oil-related activity brought on by growing global demand for crude oil and an increase in Saudi output last year. The non-oil sector grew by 5.1% in the same period, with community, social, and personal services showing the largest growth (by 9.4%), followed by transportation, storage, and communication (by 8.6%), wholesale & retail trade, and lodging & food services (by 4.3%).