RIYADH: The swift response of Saudi Arabia to the Covid-19 pandemic has cushioned the impact of the global crisis on the Arab world’s largest economy, which is now forecast to grow 2.4 per cent this year and expand 4.8 per cent in 2022, buttressed by a strong rebound in the kingdom’s non-oil sector and investment from its sovereign wealth fund, the International Monetary Fund said.
The kingdom’s non-oil economy is projected to grow 4.3 per cent this year, the fund said in a statement on Thursday. Saudi Arabia is Opec’s biggest producer and the world’s largest exporter of crude, report agencies.“The Saudi economy entered the Covid-19 pandemic with strong policy buffers and reform momentum. The authorities responded quickly and decisively to the crisis with a range of fiscal, financial, and employment support programs that helped cushion the impact of the pandemic on the private sector,” the IMF said. “The economy is recovering well. The non-oil recovery that started in the second half of 2020 is expected to continue.” Support from the kingdom’s sovereign wealth fund, the Public Investment Fund and strong domestic demand will propel economic growth, the fund said.
Saudi Arabia’s PIF is a seminal part of the kingdom’s Vision 2030 initiative, which seeks to diversify the economy, nurture local industries, create jobs and reduce the reliance on oil revenue. In January, the sovereign wealth fund launched a five-year strategy, with the aim of doubling its assets to $1.07 trillion and plans to invest a minimum of $40bn a year into the domestic economy until 2025 with the aim of creating 1.8 million jobs. It will contribute $320bn to the kingdom’s non-oil economy. The fund aims to grow assets under management to over $2tn by 2030.
The kingdom’s economic diversification also includes an expansion of entertainment complexes in different locations across the country to boost leisure tourism, a sector it is investing billions of dollars in. In 2017, the PIF set up the Saudi Entertainment Ventures Company, known as Seven, to invest and build 20 entertainment destinations, 50 cinemas and two large theme parks in prime locations across the kingdom.
“Strong reform momentum is continuing. The rapid increase in labour market participation of Saudi females and reforms to the Kafala sponsorship system for expatriate workers are very important to boost growth, productivity, and household incomes,” the IMF said. “Further, the programme to codify legal practices ... the deepening of the domestic capital markets, reforms for e-government and to harness the potential of digitalisation, and the support to SMEs and entrepreneurs are all important to support a more diversified and inclusive recovery.”