Saudi Arabia's economic transformation as it reduces oil dependence is “progressing well”, with domestic demand and the kingdom's macroeconomic policies helping to support non-oil growth, the International Monetary Fund said on Friday.
“Prudent macroeconomic policies, transformative changes … and strong domestic demand have helped prop up non-oil growth,” IMF staff said at the conclusion of its article IV consultation with Riyadh.
Still, non-oil growth was expected to decelerate this year as investment growth moderates. Real non-oil growth is forecast at 3.5 per cent this year, down from a “still robust” 3.8 per cent in 2023 and 5.3 per cent in 2022.
IMF staff said it will pick up again in 2025 and the following years ahead of marquee events including the 2027 Asian Cup, 2029 Asian Winter Games and 2030 World Expo.
Figures released by the General Authority for Statistics showed non-oil activities expanded 3.4 per cent in the first quarter this year.
“While non-oil growth for Q1-2024 indicate some moderation in economic activity – staff estimates that the output gap remains in positive territory, close to 2 per cent of the non-oil potential GDP,” IMF staff said.
The kingdom's current inflation rate is 1.6 per cent after hitting 3.4 per cent in January 2023, government data showed. The IMF expects the inflation rate to remain at a “stable” 1.9 per cent this year.
Meanwhile, the unemployment rate has fallen to 7.7 per cent, which is near Vision 2030's goal of 7 per cent.
“Efforts to diversify the economy have started to bear fruit.”
Oil output is expected to contract by 4.6 per cent this year due to an extension of oil production cuts before increasing by 5.1 per cent next year.
Saudi Arabia's economy is expected to grow 2.6 per cent this year after a 0.8 per cent contraction last year, the IMF said in its most recent World Economic Outlook. Overall GDP growth is forecast to accelerate to roughly 4.5 per cent in 2025 before stabilising at 3.5 per cent over the medium-term.
The IMF staff also said Saudi Arabia's economy withstood geopolitical tensions in the Middle East due to minimal trade and financial exposures, as well as uninterrupted shipments.
The fund also welcomed Saudi Arabia's decision to accelerate some aspects of its Vision 2030 programme while scaling back others.
“This exercise will help ensure proper sequencing of spending aimed at reducing overheating risks and maintaining fiscal and external sustainability,” the IMF staff said.
Risks to Saudi Arabia's economy are broadly balanced amid regional uncertainty with subdued global activity, geopolitics and non-Opec supply growth all representing downside risks.
Saudi Arabia's financial sector is also still strong.
“Banks’ performance indicators are strong, with capital adequacy ratio above 20 per cent, high profitability and liquidity, and a low level of non-performing loans,” the IMF said.
IMF staff also noted Saudi Arabia's progress in attracting foreign investment and remaining committed to achieving net-zero emissions by 2060.
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Three tips from La Perle's performers
1 The kind of water athletes drink is important. Gwilym Hooson, a 28-year-old British performer who is currently recovering from knee surgery, found that out when the company was still in Studio City, training for 12 hours a day. “The physio team was like: ‘Why is everyone getting cramps?’ And then they realised we had to add salt and sugar to the water,” he says.
2 A little chocolate is a good thing. “It’s emergency energy,” says Craig Paul Smith, La Perle’s head coach and former Cirque du Soleil performer, gesturing to an almost-empty open box of mini chocolate bars on his desk backstage.
3 Take chances, says Young, who has worked all over the world, including most recently at Dragone’s show in China. “Every time we go out of our comfort zone, we learn a lot about ourselves,” she says.
The specs
Engine: 1.5-litre turbo
Power: 181hp
Torque: 230Nm
Transmission: 6-speed automatic
Starting price: Dh79,000
On sale: Now
The biog
Age: 59
From: Giza Governorate, Egypt
Family: A daughter, two sons and wife
Favourite tree: Ghaf
Runner up favourite tree: Frankincense
Favourite place on Sir Bani Yas Island: “I love all of Sir Bani Yas. Every spot of Sir Bani Yas, I love it.”
Living in...
This article is part of a guide on where to live in the UAE. Our reporters will profile some of the country’s most desirable districts, provide an estimate of rental prices and introduce you to some of the residents who call each area home.
How to get there
Emirates (www.emirates.com) flies directly to Hanoi, Vietnam, with fares starting from around Dh2,725 return, while Etihad (www.etihad.com) fares cost about Dh2,213 return with a stop. Chuong is 25 kilometres south of Hanoi.
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COMPANY PROFILE
Company name: Letstango.com
Started: June 2013
Founder: Alex Tchablakian
Based: Dubai
Industry: e-commerce
Initial investment: Dh10 million
Investors: Self-funded
Total customers: 300,000 unique customers every month
Sui Dhaaga: Made in India
Director: Sharat Katariya
Starring: Varun Dhawan, Anushka Sharma, Raghubir Yadav
3.5/5
Killing of Qassem Suleimani
Three ways to limit your social media use
Clinical psychologist, Dr Saliha Afridi at The Lighthouse Arabia suggests three easy things you can do every day to cut back on the time you spend online.
1. Put the social media app in a folder on the second or third screen of your phone so it has to remain a conscious decision to open, rather than something your fingers gravitate towards without consideration.
2. Schedule a time to use social media instead of consistently throughout the day. I recommend setting aside certain times of the day or week when you upload pictures or share information.
3. Take a mental snapshot rather than a photo on your phone. Instead of sharing it with your social world, try to absorb the moment, connect with your feeling, experience the moment with all five of your senses. You will have a memory of that moment more vividly and for far longer than if you take a picture of it.
The biog
Job: Fitness entrepreneur, body-builder and trainer
Favourite superhero: Batman
Favourite quote: We must become the change we want to see, by Mahatma Gandhi.
Favourite car: Lamborghini
