Report: Saudi Arabia expected to be the world’s fastest-growing economy in 2022; GDP to rise by 7.5%

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In 2022, Saudi Arabia is expected to have the fastest-growing economy, surpassing other faltering Western European and North American countries as well as Asian heavyweights China and India.

As per the report in Economist Intelligence, the Kingdom’s gross domestic product is anticipated to expand at the fastest rate since 2011—7.5 percent—this year.

As per the research, increased energy costs, increased oil and gas output, significant investments in the energy and non-energy industries, and the successful implementation of a comprehensive COVID-19 immunisation campaign are the main drivers of the Kingdom’s economic growth, as reported by the Arab news. 

In addition, it predicted that Saudi Arabia’s real GDP growth will be close to a healthy 5% in 2023 before reverting to a more manageable 3% growth between 2024 and 2026.

The current account balance of Saudi Arabia is predicted to be in surplus in 2022, amounting to roughly $163 billion, up from $44 billion in 2021.

Consumer price inflation is anticipated to average around 2.5 percent in 2022 and to further decline in 2023 as the Saudi Central Bank continues to tighten monetary policy in accordance with the US Federal Reserve, according to the report.

It made note of the fact that the Kingdom’s ongoing regulatory reforms are enhancing the business climate and luring foreign capital.

Along with assisting the labour market, these reforms are also increasing the participation of the private sector in the economy.

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“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. 

As per the report, Saudi Arabia’s economic prognosis is still positive as long as the reform process stays on course and money keeps flowing into the country’s important initiatives and expanding industries.

The International Monetary Fund forecasted in August that Saudi Arabia’s GDP will increase by 7.6 percent in 2022.

The IMF’s Article IV consultation report predicts that the Kingdom’s inflation rate in 2022 will be 2.8 percent.

“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 Saudi economy is not likely to be significantly impacted by the rise in interest rates, according to the IMF research.

The report also mentioned that fiscal consolidation in Saudi Arabia will be supported by changes in tax administration and policy that will increase tax collection from sources other than oil.

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