The IMF economists said maintaining control of public spending will be crucial for Saudi Arabia to sustain its growth
Sweeping business reforms and the sharp rise are paving the way for Saudi economy to grow at its fastest pace in a decade.
The kingdom’s economy, which is the biggest in the Arab world, could expand by 7.6 percent by the end of this year, the International Monetary Fund said in a recent report.
“Saudi Arabia is taking impressive steps to improve the business environment, attract foreign investment and create private-sector employment,” economists at the fund, Amine Mati and Sidra Rehman, said.
The reforms, under the government’s ambitious diversification strategy Vision 2030, could pave the way to more stable growth.
“Saudi Arabia’s economic outlook is strong. Maintaining the Kingdom’s long-term prosperity depends crucially on sustaining the reform momentum,” they added.
Government data in July showed how the Saudi economy grew by 11.8 percent in the second quarter of 2022. Oil-related activity pushed the figure up with a 23.1 percent rise on an annual basis.
Last year, the IMF said the kingdom’s economy registered a 3.2 percent growth.
The IMF economists said maintaining control of public spending will be crucial for Saudi Arabia to sustain its growth.
“Improvements in tax policy and revenue administration to raise more taxes from non-oil activities would help support fiscal consolidation,” they suggested.
The kingdom must be able to manage higher oil proceeds to promote fiscal sustainability and “prevent oil-driven cycles of boom and bust.”
The recent increase in interest rates, on the back of a high inflation environment globally, will have a limited impact on the Saudi economy, IMF’s Mati and Rehman said, particularly because of high oil prices and strong liquidity.
“With strong central bank supervision, the financial sector remains resilient and systemic risks are low,” they said.
https://www.arabianbusiness.com/gcc/saudi-arabia/saudi-arabia-politics-economics/saudi-arabia-set-to-be-worlds-fastest-growing-economy-amid-business-reforms-rising-oil-prices-imf
