IMF staff lauded the Kingdom's economic and financial condition in their final statement made at the end of their visit about Article IV consultation with the Kingdom in 2022. They reiterated their constructive prognosis for the Kingdom's economy in the short and medium term, with further rebound in economic growth rates and inflation control, as well as enhanced strength in the Kingdom's external economic position.
According to the statement, the IMF anticipated the Kingdom's GDP to rise by 7.6% in 2022, the non-oil sector to grow by roughly 4.2%, the current account surplus to climb to 17.2% of GDP, and overall inflation to remain at an average of 2.8%.
The statement noted that the Kingdom successfully dealt with the coronavirus pandemic (COVID-19), emphasizing that it is in a position to overcome the risks posed by the Ukrainian crisis and the tightening monetary policy cycle in developed economies, noting that the impact of tightening global conditions on the Kingdom's economy is limited due to the banking sector's high levels of liquidity and capitalization. Economic activity is also improving significantly, aided by increased oil prices and government reforms implemented in accordance with Vision 2030.
The report also emphasized that the kingdom's economy's future prognosis is optimistic in the short and medium term, with ongoing recovery of economic growth rates, containment of inflation, and strengthening of its external economic position. The IMF staff noted that the continuation of its implementation of structural reforms will help ensure a strong, comprehensive and environmentally friendly recovery, pointing out that the Kingdom is strongly recovering from pandemic-caused recession, indicating that the support provided by public finances, the momentum of reforms, high oil prices and increased oil production helped the Kingdom recover, as it witnessed a strong boost.The real non-oil GDP grew by 4.9% in 2021 driven primarily by the recovery of the manufacturing and retail sectors (including e-commerce) and the commercial sector.
The statement noted that The Kingdom's unemployment rate fell to 10.1% in the first quarter of 2022 as a result of the high rates of employment of Saudi citizens in the private sector, while praising the effective initiatives to increase women's participation in the workforce, which led to exceeding the Kingdom's Vision 2030 targets.
In terms of fiscal policy, the mission applauded the Kingdom's commitment to ensuring the sustainability of public finances and efforts to avoid keeping up with economic cycle tendencies by establishing a spending cap unaffected by oil price variations. IMF staff also expected that public finances would outperform budget forecasts in 2022, and that the debt-to-GDP ratio would decline.
The mission also emphasized that financial stability risks are well contained, as levels of profitability, liquidity, and capitalization are good at the banking system level, and that the impact of further tightening of global monetary policy conditions will be limited on credit growth and non-oil GDP, but positive on banking sector profitability.
The IMF staff's final statement welcomed the Kingdom's efforts regarding climate policies, stressing that the government is working to intensify investments in the production of blue and green hydrogen, in addition to its continuous efforts in research and development with a focus on the circular carbon economy.
For his part, His Excellency the Minister of Finance, Mr. Mohammed bin Abdullah Al-Jadaan, said: The statement highlighted the current indicators and positive future prospects for the Saudi economy, which has overcome many of the obstacles and challenges confronting the global economy over the last two years while maintaining financial sustainability, enhancing the Saudi economy's solidity and strength; stressing the importance of the Kingdom's economic and structural changes under Vision 2030, as well as their contribution to attaining sustainable and inclusive economic growth.
His Excellency welcomed the IMF staff' praise of the Kingdom's efforts to mitigate the economic, social and health effects of the Corona pandemic, stressing that the Kingdom is currently experiencing a strong recovery following the pandemic-induced recession, and that rising oil prices provides an opportunity to accelerate the pace of reforms being implemented under the Saudi Vision 2030.
It is noteworthy that an initial statement was issued by the IMF mission following the conclusion of Article IV consultation with the Kingdom of Saudi Arabia in 2022, which took place during April 2022. This final statement confirms the preliminary findings of the previous statement.