IMF Article IV affirms Saudi Arabia's economic resilience to global shocks
The report emphasized Saudi Arabia's robust economic resilience in the face of external shocks and challenges, driven by the Kingdom's significant and effective economic and financial reforms under Saudi Vision 2030.
It also highlighted the sustained growth of non-oil economic activities, the effective containment of inflation and a decline in the unemployment rate to a historic low of 7 percent — surpassing the target set under Saudi Vision 2030 well ahead of schedule.
The report commended the Kingdom's efforts to enhance its medium-term investment strategies and financing mechanisms, highlighting the government's shift toward a more structured medium-term fiscal planning approach.
The report also commended the forward-looking approach of implementing expenditure ceilings across all entities through 2030.
Furthermore, it indicated that the direct impact of global trade tensions on the Kingdom remains limited, and that robust domestic demand, along with the gradual easing of OPEC+ production cuts, is expected to support economic growth despite elevated global uncertainty.
Among the positive economic indicators highlighted in the report was the continued strong growth of the Saudi economy, fueled by robust private investment and consumption. It noted that real non-oil gross domestic product grew by 4.5 percent in 2024, while non-oil private investment recorded a year-on-year increase of 6.3 percent.
It is worth mentioning that in 2024, the Saudi economy achieved remarkable and unprecedented milestones, marked by record-low unemployment, substantial progress in economic diversification and continued growth in non-oil sectors.
The report said that despite increasing global uncertainty and declining commodity price expectations, real non-oil GDP is projected to grow by 3.4 percent in 2025, fueled by the ongoing implementation of ambitious Vision 2030 projects and robust credit growth.
The statement of the IMF commended the Kingdom's efforts to assess multiple scenarios and formulate proactive strategies to safeguard the sustainability of public finances amid potential major shocks.
It further emphasized that focusing on high-impact projects is an effective approach to maintaining fiscal sustainability.
The IMF report noted that Saudi Arabia's banking system remains well capitalized and profitable, with ample liquidity and minimal systemic risks in the financial sector. It also endorsed the continued peg of the Saudi riyal to the US dollar, affirming its continued appropriateness.
In conclusion, I believe the IMF's Article IV Consultation report effectively underscores the Kingdom's notable economic and financial accomplishments in 2024.
Also, the report objectively highlighted the strong resilience of the Saudi economy to external economic shocks, as well as the effectiveness of its mitigation strategies. For instance, while the report recognized the potential impact of rising global trade tensions, it emphasized that the direct effect on Saudi Arabia remains limited.
This is owed to robust domestic demand and the gradual unwinding of OPEC+ production cuts, which are expected to continue driving economic growth.
It is worth mentioning that in 2024, the Saudi economy achieved remarkable and unprecedented milestones, marked by record-low unemployment, substantial progress in economic diversification and continued growth in non-oil sectors. These achievements underscore the Kingdom's economic resilience, with contained inflation and a strong capacity to absorb and navigate external economic shocks and challenges.
The report highlighted the Kingdom's ongoing efforts to effectively advance the expansion of non-oil economic activities.
It also effectively highlighted the Kingdom's efforts to enhance fiscal transparency and assess risks surrounding public finances.
The report commended the medium-term investment plans and their financing strategies, the government's shift toward medium-term fiscal planning and the proactive approach in setting expenditure ceilings for all entities through 2030.
Finally, the report welcomed the Kingdom's efforts in conducting scenario analyses and developing proactive strategies to safeguard the sustainability of public finances in the face of potential shocks. It emphasized that prioritizing high-impact projects reflects a prudent approach to ensuring long-term fiscal sustainability.
It is worth noting that the Saudi Ministry of Finance welcomed the report, and said that it highlights the Kingdom's resilience and strong ability to navigate external economic shocks and challenges.
• Talat Zaki Hafiz is an economist and financial analyst. X: @TalatHafiz
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Leaders
3 hours ago
- Leaders
Saudi AI Firm Humain to Roll out Arabic ChatGPT by Late August
Saudi Arabia's artificial intelligence company Humain will release an Arabic-language version of ChatGPT by the end of August, CEO Tareq Amin announced. Amin noted that the model was developed entirely by a Saudi team, according to Gulf News. The CEO also stated that the Public Investment Fund–backed company seeks to reach a valuation comparable to the world's top AI firms, during a TV interview. In line with the Saudi Vision 2030, Humain aims also to leave a global mark on the AI sector, contribute significantly to the diversification of the Kingdom's economy, as well as build advanced digital infrastructure. 'Humain was created to lead this transformation by building a modern technological foundation that boosts GDP, localizes technology, and empowers Saudi talent,' Amin said. Humain's Ambitious Agenda Through an ambitious agenda, the company pursues to cut the Kingdom's oil dependency, create knowledge-based economy and build AI infrastructure from scratch. 'Humain reflects Saudi Arabia's ambition to be, in AI, what it is in oil and energy, a global leader,' he added. In this regard, the CEO stressed the strategic significance of data localization, underscoring that recent investments by AWS and Microsoft have paved the way for large-scale data centers to be built inside the Kingdom. Interestingly, the company's models are designed to cater not only to domestic demand but also to attract a global user base. Overall, Humain's ultimate goal is to become one of the world's top five data center operators and market its AI models worldwide. 'We have the talent, the resources, and the drive to get there,' Amin said. Related Topics: Saudi Arabia's Location & Energy Advance Artificial Intelligence Artificial Intelligence to create 69 Mln Jobs Aramco Leads Globally in Artificial Intelligence Short link : Post Views: 35
Leaders
3 hours ago
- Leaders
Saudi Business Center Showcases Investment Opportunities at Expo 2025 Osaka
The Saudi Business Center promoted Saudi Arabia's investment climate and streamlined government services during a workshop at the Kingdom's pavilion at Expo 2025 Osaka, as part of efforts to attract Japanese investors and deepen economic ties. The workshop, attended by Japanese business leaders and prospective investors, outlined the Center's role in simplifying procedures for launching and operating businesses in Saudi Arabia. Officials highlighted a range of integrated services designed to support foreign investors entering the Saudi market and participating in national development projects. The Center operates 20 branches in 15 cities and offers a digital platform that consolidates more than 6,000 services from 62 government agencies, in line with Riyadh's broader strategy to position itself as a global benchmark for business-friendly governance. Saudi representatives said the initiative reflects the Kingdom's commitment to improving the ease of doing business and creating a competitive environment for international investment. Short link : Post Views: 28 Related Stories
Argaam
5 hours ago
- Argaam
Al Arabia's Q2 losses attributed to new project costs: Chairman
Mohammed Alkhereiji, Chairman of Arabian Contracting Co. (Al Arabia), said that the company's losses in the second quarter of 2025 are due the costs of new projects that had not yet entered the operational phase. This is in addition to the impact of the application of accounting standards on long-term contracts, which resulted in high expenses for the current period before the expected revenues began to be realized, he added. In an interview with Al Arabiya Business, the chairman indicated that all of the company's major contracts, which span ten years, began within a short period of time, doubling the impact of costs on the current financial results. He pointed out that these projects, most notably the Remat project, have not yet reached full operation, whether in the digital zones or the new high-end billboards, which are expected to generate high revenues upon their launch. The completion of these projects and the planned exclusivity are expected to be achieved in Q4 2025, along with improved market conditions and the company's confidence in the strength of the Saudi economy, which will significantly improving the company's financial results and returning to profitability. Al-Khereiji also indicated that the company is currently in advanced discussions with Remat Al-Riyadh to activate a previously announced agreement, which stipulates converting a portion of the project's revenues with Al Arabia into shares in the latter. According to Argaam's data, Al Arabia signed, in March 2024, an independent agreement with Remat Al-Riyadh Development Co. to convert part of the investment returns owed to Remat Al-Riyadh under the construction, operation, and maintenance contract for Riyadh's outdoor billboards into Remat Al-Riyadh's stake in Al Arabia. The agreement involves an annual deduction of SAR 200 million (10%) of the project's annual income, whichever is greater. This is in order to allocate shares in Al Arabia to Remat Al-Riyadh on an annual basis for the entire duration of the project. The chairman noted that the company is considering making amendments and compensations to some existing contracts if it fails to secure certain rights, which could have a positive impact on its financial performance in the coming periods. Al-Khereiji also stated that Al Arabia saw sales growth year-on-year during the first half of 2025, despite the challenges facing local and global markets and the overall decline in advertising spending. This growth is attributed to the company's increased market share of advertising, including attracting advertisements previously directed to social media platforms, without the need to increase the number of billboards, according to the top official. He also stressed that the completion of new projects and the increase in quality billboards will support the achievement of the targeted revenues and the return to profitability, expecting the picture to become clearer between the third and fourth quarters of this year.
