According to the international credit rating agency Moody’s, Saudi Arabia’s economy will grow at an average annual rate of 3.2 percent during the following three years, particularly significant development anticipated in the non-oil sector.
According to the US-based company, the non-hydrocarbon industry will contribute an average of three percentage points annually to economic growth, significantly affecting it.
This was attributed by Moody’s to Saudi Arabia’s efficient macroeconomic and monetary policies, as well as its strong oversight of the banking industry and prudent budgetary planning.
“The positive outlook underscores the growing possibility that, with reforms and investment across different non-oil sectors, the sovereign’s economic and budgetary reliance on hydrocarbon will, eventually, materially decline,” the report added.
The administration is making advancements toward completing its widespread structural change agenda, which is going to promote the longevity of diversifying the economy efforts over the short, medium, and long term,” it was stated.
Moody’s predicted that the Kingdom would have an average budget deficit despite expected growth. In 2023–2024, it is anticipated to be close to 2% of GDP; but, by 2025–2026, it is anticipated to rise to 3.5 % of GDP.
Despite the fact that this is different from the budget surplus of 2.5% seen in 2022, it is due to the increase in spending linked to Saudi Arabia’s ambitious diversification of its economy plan.
However, Moody’s highlighted the government’s strong balance sheet, viewing it as a safeguard against these deficits.
According to the report, “Momentum is building behind an extensive number of government-sponsored the diversification projects and initiatives, which, if carried out successfully and, most importantly, supported by investment from the private sector, will be the key driver of the growing size of Saudi Arabia’s non-hydrocarbon the industry and jobs over the coming years.”
The projection by the agency is consistent with earlier government figures that showed the Kingdom’s non-oil growth.
In accordance with an assessment by the General Authorities for Statistics, the non-oil sector saw a 6.1 percent increase in the second quarters of 2023, which helped Saudi Arabia’s GDP grow by 1.2 percent year over year.
Additionally, the IMF highlighted on September 7 that the Kingdom’s budgetary prospects are positive in the near term and that risks are generally well-balanced.
The IMF said in a news release that Saudi Arabia has the greatest economic expansion among the G20 nations, with a total expansion rate of 8.7 per cent.
The Kingdom has adequate precautionary reserves, according to the financial agency, and its economy benefits from the currency rate’s peg to the US dollar.