IMF: Saudi Arabia's economic growth driven by diversification
efforts
The International Monetary Fund (IMF) has affirmed that the
Saudi economy is undergoing a transformation, with reforms aimed at reducing
dependence on oil, diversifying income sources, and enhancing competitiveness.
According to an article published on the IMF's website,
titled "Saudi Arabia's Economy Grows as it Diversifies," written by
IMF economists Amine Mati and Sidra Rehman, the Fund highlighted the
significant progress made in non-oil growth, which averaged 4.8% in 2022,
reflecting a doubling of non-oil revenue in just four years due to VAT rate
increases and high regulatory compliance.
IMF
appreciates Vision 2030 to keep Saudi economic and fiscal position strong
Key points mentioned in the article include:
Non-Oil Exports: Non-oil exports reached a record
$84.4 billion in 2022, showcasing Saudi Arabia's success in diversifying its
revenue sources.
Diversification Efforts: The manufacturing and
services sectors saw a 15% increase over the past two decades, with the tourism
sector contributing 4.5% to GDP.
Labor Market Reform: Labor market reform and increased
participation of Saudis in high-skilled jobs, which rose from 32% in 2016 to
42% in 2022. Female workforce participation doubled over the past four years,
exceeding the Vision 2030 target.
Digitalization: The digital sector's contribution to
overall growth increased from 0.2% in 2016 to 15% in 2022, enhancing financial
sector resilience, government efficiency, and financial inclusion.
Economic Outlook: Despite lower overall growth due to
additional oil production cuts, non-oil growth is expected to remain close to
5% in 2023, driven by strong domestic demand.
Investment: New investment deals and licenses grew
significantly in 2022, driven by a new set of laws promoting entrepreneurship,
protecting investors' rights, and reducing business costs. The Saudi Investment
Fund (PIF) has also played a role in stimulating private sector investment.
Future Challenges: Challenges ahead include ensuring
that large projects generate returns and boost productivity, fostering an
environment for innovation, and investing in workforce skills to complement
diversification efforts.
The IMF's assessment underscores Saudi Arabia's commitment
to economic diversification and its progress in achieving the goals outlined in
Vision 2030.
Source: https://english.aawsat.com/
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