09-08-2025
IMF Article IV affirms Saudi Arabia's economic resilience to global shocks
The International Monetary Fund issued its final report of Article IV consultations with the Kingdom of Saudi Arabia on Aug. 4.
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
