São Paulo – Strong government spending and private investment should drive Saudi Arabia’s Gross Domestic Product (GDP) to 4%-plus growth rates in 2014 and 2015, the International Monetary Fund (IMF) said this Tuesday (20th) in a report on the country’s economy. In a press release, the Fund claims that an IMF mission convened with the Saudi authorities from May 4th to 15th. Mission chief Tim Callen made a statement on the meeting and the Saudi economic scenario.
“Saudi Arabia continues to play a systemic role in stabilizing the global oil market, which contributes positively to the global economy. Regionally, Saudi Arabia is a generous provider of financial assistance to other countries, while remittances sent home by expatriates working in the country are an important source of income for many countries,” Callen says in the release.
Saudi Arabia is home to large numbers of expatriate workers, and has been supplying aid in cash and oil to crisis-ridden Arab states, such as Egypt. The country is also the world’s leading oil producing country, and varies its output to meet demand.
The IMF believes the Saudi economy will keep growing in years to come, inflation is likely to remain subdued and the country boasts the fiscal and financial buffers required to withstand eventual economic crises.
The Fund notes that the country is investing heavily in economic diversification and job creation. Efforts include “further developing infrastructure, improving the business environment, increasing the quality of education and skills, and employing more Saudi nationals in the private sector.”
The IMF admonishes, however, that the Saudi government’s high investment in diversifying the economy will drive up spending and should drive down the country’s fiscal surplus in the next few years. The document warns that local authorities have initiated actions to strengthen the fiscal framework, and advises the government to develop tools for managing the volatility of oil revenues.
*Translated by Gabriel Pomerancblum
