Arab Press

بالشعب و للشعب
Saturday, Jun 21, 2025

IMF sees Saudi inflation contained at 2.8% as GDP growth hits decade-high

IMF sees Saudi inflation contained at 2.8% as GDP growth hits decade-high

Saudi Arabia’s gross domestic product is expected to grow at the fastest rate in almost a decade at 7.6 percent with inflation likely to remain at 2.8 percent in 2022, the International Monetary Fund’s Article IV Consultation report has predicted.
Saudi Arabia is rebounding strongly from the pandemic-induced recession, driven by the Kingdom’s pro-business reforms and higher oil prices, it said.

Despite higher prices for imported commodities, the inflation rate in the Kingdom will be contained at 2.8 percent in 2022, as the central bank tightens policy in line with the US Federal Reserve, the report added.

“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,” the IMF said in a press release.

At a press conference on Wednesday, Amine Mati, assistant director of the IMF, predicted that Saudi Arabia is expected to attain a budget surplus of about 5.5 percent of its gross domestic product, as its surplus in the second quarter hit $21 billion.

Mati elaborated that effective utilization of the Kingdom’s growing surplus will be achieved by making sure that the budget allocations are respected. He added that social spending should remain in line with the increase in surplus, which would then be re-injected into the economy.

“Implementing a fiscal rule will help sustain a fiscal anchor over the medium term and integrated asset liability management framework will help the government assess Saudi Arabia’s fiscal stance and position,” said Mati.

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

When addressing the rising inflationary pressures, Mati stated that “the exchange rate peg to the US Dollar continues to serve Saudi Arabia.”

“Inflation is contained, despite increased international commodity prices, because of low pass through,” said Mati. “The external position is expected to strengthen substantially, with the current account surplus reaching levels not seen in a decade.”

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

Mati explained that the increase of the value-added tax from 5 percent to 15 percent in the middle of the COVID-19 pandemic was essential in promoting non-oil revenue growth, and noted that tax administration measures also help sustain and accelerate tax revenues.

According to the report, the Public Investment Fund should focus on high return projects with private involvement, as it continues to implement giga-projects.

The report added that Saudi Arabia is taking impressive steps to improve the business environment, which will attract foreign investments.

It further stated that the proportion of Saudi women in work has doubled in the past four years to 33 percent in the first quarter of 2022, exceeding the 30-percent target set under the Vision 2030 plan.

“Priorities to foster a more inclusive and green economy include increasing further women labor force participation, making sure PIF interventions play a catalytic role, strengthening governance, and rolling out the Saudi green initiative,” the IMF said in the report.

The impressive pace of digitization in the Kingdom has the potential to boost productivity and overall growth, it added.

“The surge in digital account openings and online mobile financial transactions during the pandemic has helped in improving financial inclusion — 83 percent of the adult population now own a bank account as of 2021, up from 71 percent in 2019,” it said.

Speaking at the conference, Mati stated that the advancement of digitalization translates to a more educated workforce that is better equipped for following up on future developments, which positively impacts the future of FDI.

According to the IMF, the Saudi Green Initiative, which was launched in 2021, requires policy measures to reduce greenhouse gas emissions and support greener growth.

The report concluded that Saudi Arabia’s economic outlook is strong, and the Kingdom’s long-term prosperity strongly depends on sustaining the reform momentum.
Newsletter

Related Articles

Arab Press
0:00
0:00
Close
Israel Confirms Assassination of Quds Force Commander in Tehran
16 Billion Login Credentials Leaked in Unprecedented Cybersecurity Breach
Senate hearing on who was 'really running' Biden White House kicks off
G7 Leaders Fail to Reach Consensus on Key Global Issues
Mass exodus in Tehran as millions try to flee following Trump’s evacuation order
Iranian Military Officers Reportedly Seek Contact with Reza Pahlavi, Signal Intent to Defect
China's Iranian Oil Imports Face Disruption Amid Escalating Middle East Tensions
Trump Demands Iran's Unconditional Surrender Amid Escalating Conflict
Israeli Airstrike Targets Iranian State TV in Central Tehran
President Trump is leaving the G7 summit early and has ordered the National Security Council to the Situation Room
Netanyahu Signals Potential Regime Change in Iran
Analysts Warn Iran May Resort to Unconventional Warfare
Iranian Regime Faces Existential Threat Amid Conflict
Energy Infrastructure Becomes War Zone in Middle East
Iran Conducts Ballistic Missile Launches Amid Heightened Tensions with Israel
Iran Signals Openness to Nuclear Negotiations Amid Ongoing Regional Tensions
Shock Within Iran’s Leadership: Khamenei’s Failed Plan to Launch 1,000 Missiles Against Israel
UK Deploys Jets to Middle East Amid Rising Tensions
Exiled Iranian Prince Reza Pahlavi Urges Overthrow of Khamenei Regime
Wreck of $17 Billion San José Galleon Identified Off Colombia After 300 Years
Iran Launches Extensive Missile Attack on Israel Following Israeli Strikes on Nuclear Sites
Israel Issues Ultimatum to Iran Over Potential Retaliation and Nuclear Facilities
Coinbase CEO Warns Bitcoin Could Supplant US Dollar Amid Mounting National Debt
Trump to Iran: Make a Deal — Sign or Die
Operation "Like a Lion": Israel Strikes Iran in Unprecedented Offensive
Israel Launches 'Operation Rising Lion' Targeting Iranian Nuclear and Military Sites
Israeli Forces Intercept Gaza-Bound Aid Vessel Carrying Greta Thunberg
IMF Warns of Severe Global Trade War Impacts on Emerging Markets
Syria to Reconnect to Global Economy After 14 Years of Isolation
Saudi Arabia Faces Uncertainty Over Succession After Mohammed bin Salman
Israel Confirms Arming Gaza Clan to Counter Hamas Influence
Majority of French Voters View Macron's Presidency as a Failure
U.S. Reduces Military Presence in Syria
Trump Demands Iran End All Uranium Enrichment in Nuclear Talks
Iran Warns Europe Against Politicizing UN Nuclear Report
Businessman Mauled by Lion at Luxury Namibian Lodge
Paris Saint-Germain's Greatest Triumph Is Football’s Lowest Point
OPEC+ Agrees to Increase Oil Output for Third Consecutive Month
Turkey Detains Istanbul Officials Amid Anti-Corruption Crackdown
Meta and Anduril Collaborate on AI-Driven Military Augmented Reality Systems
EU Central Bank Pushes to Replace US Dollar with Euro as World’s Main Currency
European and Arab Ministers Convene in Madrid to Address Gaza Conflict
Head of Gaza Aid Group Resigns Amid Humanitarian Concerns
U.S. Health Secretary Ends Select COVID-19 Vaccine Recommendations
Trump Warns Putin Is 'Playing with Fire' Amid Escalating Ukraine Conflict
India and Pakistan Engage Trump-Linked Lobbyists to Influence U.S. Policy
U.S. Halts New Student Visa Interviews Amid Enhanced Security Measures
Trump Administration Cancels $100 Million in Federal Contracts with Harvard
SpaceX Starship Test Flight Ends in Failure, Mars Mission Timeline Uncertain
King Charles Affirms Canadian Sovereignty Amid U.S. Statehood Pressure
×