IMF: Vision 2030 Reforms Help Saudi Economy Beat Pandemic Recession

The Vision 2030 strategy has helped the Saudi economy beat the pandemic recession, with growth projected to rise to nearly 5 % next year, according to the latest assessment from the International Monetary Fund. In an upbeat analysis of the Kingdom’s prospects for recovery, the Fund said: “The authorities responded quickly and decisively to the COVID-19 crisis. Reforms under Vision 2030 have played a key role in helping the economy navigate the pandemic.”

Growth in gross domestic product is estimated at 2.1 % in 2021, a 6.2 % turnaround from the sharp falls in economic activity suffered by Saudi Arabia and the rest of the world last year, before taking off in a sharp V-shaped recovery next year, when GDP will grow 4.8 %. “The economic recovery is ongoing, the unemployment rate has fallen, and consumer price inflation is easing,” the Fund said.

Growth in the crucial non-oil sector highlighted as the avenue for future growth is expected to return to positive territory of 3.9 % this year and 3.6 % next year. GDP in the oil sector is also expected to lift off next year, to 6.8 %, as the production cuts of the OPEC+ producers’ alliance end and with many experts predicting a surge in crude prices.

The Fund singled out the Kingdom’s financial sector for special commendation. “The financial sector continues to be well-regulated and supervised … The impressive pace of equity and debt market reforms has continued,” The Fund said. “Foreign exchange reserves remain at very comfortable levels.”

The IMF urged the Kingdom’s policymakers to quicken the pace of reforms. “Structural reforms should continue to be implemented to secure strong, sustained, inclusive, and greener growth,” the Fund said.

It also gave a seal of approval to recent policy initiatives to boost private sector involvement in the economy. “Public sector interventions can help overcome the reluctance of private companies to enter new or riskier sectors but need to be carefully implemented,” the Fund said.

Finance Minister Mohammed Al-Jadaan said the report shows the success of the Kingdom’s government in achieving positive results during a global crisis. “Such results have been achieved despite the impact of the COVID-19 pandemic, fluctuations in oil prices, sharp economic fluctuations, declining in global demand, receding growth and other challenges that the Saudi government has risen to,” he said.