Saudi Arabia Poised to Become World’s Fastest-Growing Economy in 2022

A report published in Economist Intelligence earlier this week says that Saudi Arabia is set to outpace Asian giants like China, India, and the currently struggling economies in Western Europe and North America to become the fastest-growing economy in 2022.

The report suggested that the Kingdom’s real gross domestic product is expected to reach 7.5 percent this year, its fastest economic growth rate since 2011 primarily driven by higher energy prices, increased production of oil and gas, and large-scale investment in the energy and non-energy sectors.

It places Saudi Arabia at the top of the economic growth chart for the world’s 20 largest economies (measured in US dollars at purchasing power parity), adding that its economic outlook remains promising.

The estimates are that the Kingdom’s real GDP growth in 2023 will be close to a solid 5% before slipping back to a reasonably strong 3% between 2024 and 2026.

It is expected, as per the report, that Saudi Arabia keeps consumer price inflation under wraps as the Saudi Central Bank continues to tighten monetary policy in line with the US Federal Reserve, projecting average inflation of about 2.5 percent in 2022, which is expected to lower further in 2023 despite the pressure added by the expensive imported commodities.

That means that, together with China and Japan, the Kingdom will record the lowest annual average inflation rate among the world’s 20 largest economies.

The report also shows that the current-account balance of Saudi Arabia will post an enormous surplus of about $163bn – up from $44bn in 2021 – and the international reserves of $475bn are almost back to pre-pandemic levels.

The regulatory pro-business reforms currently underway in the Kingdom, as the report explains, are not only boosting private sector participation in the economy and supporting the labor market but are also improving the business environment and attracting foreign investments.

The reforms are enabling foreign companies to easier start a business and invest in the economy, both of which are fundamental to the long-term development plans under the Saudi Vision 2030 strategy.

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