IMF: Saudi economy close to reducing dependence on oil

A senior official at the International Monetary Fund said that the reforms led by the Saudi government and the growth of private investment in new sectors will help support the growth of the non-oil economy in the Kingdom, amid expectations of a sharp slowdown in overall growth this year.

According to “Reuters”, the Saudi economy grew by 8.7 percent last year, as high oil prices boosted revenues and led to the kingdom’s first budget surplus in nearly 10 years.

The IMF expects Saudi gross domestic product growth to drop by more than half to 3.1 percent this year, in line with expectations for oil-exporting countries in the Middle East. However, this figure is higher than the 2.6 percent growth rate forecast by the IMF in January

Several OPEC+ members, led by the world’s top crude exporter Saudi Arabia, recently announced abrupt cuts in oil production from May, initially sending global prices higher, despite global concerns and an uncertain demand outlook. Click on the prices

“With the implementation of the new OPEC + quotas this year, we expect the oil sector to slow down,” said Jihad Azour, Director of the Middle East and Central Asia Department at the International Monetary Fund, adding that the impact on the kingdom’s budget depends on prices.

He added, “Reducing oil production will affect growth because production will decrease, but revenues can grow, and this may have a positive impact on both the foreign transactions account, reserves, and the budget deficit.”

He added, “It is clear that the strategy over the past five or six years has helped the Saudi economy as well as public finances to be less affected by the movement of oil prices.”

The Kingdom began an ambitious economic transformation plan known as Vision 2030, to pump billions in investments in other non-oil sectors with the aim of diversifying the economy such as tourism, launching huge infrastructure projects, and developing the financial and private sectors.

“The size of the non-oil economy is growing and driven mainly by the private sector,” Azour said.