RIYADH – The International Monetary Fund (IMF) confirmed that the Kingdom has been one of the best performing G20 economies in recent years and has supported the global economy through its stabilizing role in the global oil market.
The IMF also pointed out to the positive outlook of the Saudi economy which grew by 5.1 percent in 2013, benefitting from high oil prices and output, strong private sector growth, and government spending.
This came in a press release issued by IMF Executive Board after it concluded 2013 Article IV Consultation with Saudi Arabia.
Credit growth has remained strong, and the banking system is well-capitalized and profitable, with (Basle III Capital Standards) implemented in January 2013. Following an expansionary fiscal stance in 2011, government expenditure growth slowed in 2012 and the non-oil deficit began to narrow. Consistent with the exchange rate peg, monetary policy settings have remained unchanged.
Inflation has risen over the past year to 3.8 percent in May 2013, driven by higher food prices and housing costs. High oil prices and production led to large fiscal and current account surpluses, and international reserves rose further. Looking ahead, growth is projected to slow to 4 percent in 2013. Private sector growth is expected to be strong, but oil production is likely to be below 2012 levels while government spending growth may slow.
Inflation is expected to ease toward year-end in line with declining international food prices. With oil prices and production expected to be lower, fiscal and external surpluses, while remaining large, are projected to narrow this year.
The press release said the IMF Assessment Executive Directors also welcomed the continued strong performance of the Saudi Arabian economy and the systemic and stabilizing role that the country plays in the global oil market.
They also acknowledged Saudi Arabia’s role as an important source of financial assistance and remittances for many developing countries.
Directors welcomed the measures the Saudi authorities have undertaken to strengthen fiscal management.
The Saudi population is young and increasingly well-educated, and as it continues to enter into its working-age years, there is a tremendous opportunity to boost growth and raise living standards further.
Against this background, the government is continuing to implement initiatives to boost the employment of Saudi nationals, increase the supply of housing, improve infrastructure, particularly in the area of transportation, and develop the small-and medium enterprise (SME) sector.
IMF Directors welcomed the large investments in education aimed at strengthening the skills of the population.