IMF: Vision 2030 reforms drive Saudi recovery from the pandemic

The Vision 2030 strategy has helped the Saudi economy overcome the pandemic recession, with growth expected to rise to almost 5 per cent next year, according to the latest assessment by the International Monetary Fund. In an upbeat analysis of Saudi Arabia's recovery prospects, the Fund said: "The authorities responded swiftly and decisively to the COVID-19 crisis. Reforms under Vision 2030 have played a key role in helping the economy weather the pandemic."

The current year can be described as the year of implementation and commencement of construction work on projects that rank as the largest of their kind in the world. These projects are set to be an international role model in terms of quality, environmental friendliness, sustainability and the use of renewable and alternative energies, according to the Saudi government. 

Gross domestic product growth is estimated to be 2.1 per cent in 2021, a 6.2 per cent turnaround from the sharp declines in economic activity that Saudi Arabia and the rest of the world suffered last year, before taking off in a strong "V-shaped" recovery expected next year, when GDP will grow by 4.8 per cent.

"Economic recovery is underway, the unemployment rate has declined and consumer price inflation is easing," the Fund said. Growth in the crucial non-oil sector, highlighted as the path for future growth, is expected to turn positive again, at 3.9 per cent this year and 3.6 per cent next year. Oil sector GDP is also expected to take off next year, to 6.8 per cent, as the OPEC+ producer alliance's production cuts come to an end and many experts expect oil prices to rise.

The Fund singled out Saudi Arabia's financial sector for particular praise and a favourable projection for the future. "The financial sector remains well regulated and supervised..... The impressive pace of debt and equity market reforms has continued," it said. "Foreign exchange reserves remain at very comfortable levels." Still, the IMF urged policymakers to accelerate the pace of reforms, "Structural reforms must continue to be implemented to ensure strong, sustained, inclusive, and greener growth."

It also welcomed recent policy initiatives to boost private sector participation in the economy. "Public sector interventions can help overcome the reluctance of private firms to enter new or riskier sectors, but they must be carefully implemented," the IMF said. Last month, Saudi Arabia continued its movement on the ground, as the crown prince launched an ambitious programme to strengthen the partnership between the government and private sectors, dubbed Shareek (partner), and accelerate the achievement of the strategic goals of increasing the economy's resilience and supporting prosperity and sustainable growth.

Finance Minister Mohammed al-Jadaan said the report shows the government's success in achieving positive results during a global crisis. "Such results have been achieved despite the impact of the COVID-19 pandemic, oil price fluctuations, sharp economic fluctuations, declining global demand, slowing growth and other challenges that the Saudi government has faced," he said. 

Five years after Crown Prince Mohammed bin Salman launched Saudi Vision 2030, the current year 2021 saw practical movement on the ground for the implementation of the Vision's projects. Despite the repercussions of the COVID-19 pandemic and its effects that impacted the global scene, Saudi Arabia continues to announce the executive programmes of the mega-projects that, once completed, are expected to constitute a unique global model for sustainability, environmental protection, nature conservation, quality of life and employment generation.