Saudi Arabia to become world’s fastest-growing economy in 2022 as GDP likely to grow 7.5%: Report

RIYADH: Saudi Arabia is poised to become the fastest-growing economy in 2022, outpacing Asian giants like China, India, and other struggling economies in Western Europe and North America, according to a report. 

The report published in Economist Intelligence suggested that the gross domestic product of the Kingdom is expected to reach 7.5 percent this year, its fastest growth rate since 2011. 

The Kingdom’s economic growth is primarily driven by higher energy prices, rising oil and gas production, large-scale investment in the energy and non-energy sectors, and the successful rollout of an extensive COVID‑19 vaccination program, the report said. 

It further said that the Saudi real GDP growth will be close to a solid 5 percent in 2023 before slipping back to a reasonably strong growth of about 3 percent between 2024 and 2026.

Saudi Arabia’s current account balance in 2022 is likely to witness a surplus of about $163 billion, up from $44 billion in 2021. 

As the Saudi Central Bank continues to tighten monetary policy in line with the US Federal Reserve, consumer price inflation is expected to average about 2.5 percent in 2022, and it is expected to lower further in 2023, the report added. 

It pointed out that the regulatory reforms currently underway in the Kingdom are improving the business environment and are attracting foreign investments. 

These reforms are also boosting private sector participation in the economy, along with supporting the labor market. 

“Pro-business reforms have made it easier to start a business and easier for foreign companies to invest in the economy, both of which are fundamental to the Kingdom’s long-term development plans under the Vision 2030 strategy,” the report said. 

It added that Saudi Arabia’s economic outlook remains promising, provided the reform process remains on track and finance continues to flow into the Kingdom’s strategic projects and growth sectors. 

In August, the International Monetary Fund predicted that Saudi Arabia’s GDP is expected to expand by 7.6 percent in 2022. 

According to the IMF’s Article IV consultation report, the inflation rate in the Kingdom will be 2.8 percent in 2022. 

“Liquidity and fiscal support, reform momentum under Vision 2030, and high oil prices and production helped the economy recover with robust growth, contained inflation and a resilient financial sector,” said the IMF in a press release. 

The IMF report noted that the increase in interest rates is expected to have only a limited impact on the Saudi economy. 

The report further noted that improvements in tax policy and revenue administration to raise more taxes from non-oil activities will help support fiscal consolidation in Saudi Arabia.