World Bank raises forecast for Saudi economy growth to 4.9% during 2022

The World Bank raised on Saturday its forecast for the growth of the Saudi economy during the current year to 4.9%, compared to its previous forecast (June 2021), estimated at 3.3%, and kept its estimates for the growth of the Saudi economy during 2021 at 2.4%, while it expected that the economy would grow by 2.3% in the year 2023 compared to 3.3% previous forecast.

“In Saudi Arabia, the growth forecast for 2022 has been revised up by 1.6 percentage points to 4.9 percent.” The report said.

The oil sector is expected to rebound strongly, boosting exports, and non-oil activity should benefit from high vaccination rates and accelerating investment.

Higher oil production, with OPEC+ countries agreeing to reduce oil production cuts to zero by September 2022, and elevated oil prices have supported growth in oil exporters in the region.

The global recovery is set to decelerate markedly amid continued COVID-19 flare-ups, diminished policy support, and lingering supply bottlenecks.

In contrast to that in advanced economies, output in emerging market and developing economies (EMDEs) will remain substantially below the pre-pandemic trend over the forecast horizon.

The global outlook is clouded by various downside risks, including renewed COVID-19 outbreaks due to Omicron or new virus variants, the possibility of de-anchored inflation expectations, and financial stress in a context of record-high debt levels.

If some countries eventually require debt restructuring, this will be more difficult to achieve than in the past. Climate change may increase commodity price volatility, creating challenges for the almost two-thirds of EMDEs that rely heavily on commodity exports and highlighting the need for asset diversification. Social tensions may heighten as a result of the increase in between-country and within-country inequality caused by the pandemic. Given limited policy space in EMDEs to support activity if needed, these downside risks increase the possibility of a hard landing.

These challenges underscore the importance of strengthened global cooperation to foster rapid and equitable vaccine distribution, proactive measures to enhance debt sustainability in the poorest countries, redoubled efforts to tackle climate change and within-country inequality, and an emphasis on growth-enhancing policy interventions to promote green, resilient, and inclusive development and on reforms that broaden economic activity to decouple from global commodity markets.