São Paulo – Saudi Arabia’s non-oil sector is expected to grow by 7.6% this year, while the country’s GDP should be up only 4.4% due to a decline in oil output and reduced government spending. The forecast was made by Tim Callen, the chief of an International Monetary Fund (IMF) mission to the country from May 5th to 18th. <\/p>\n
“Inflation has picked up since the middle of 2012 due to higher food prices and price increases in restaurants, hotels, and transportation, but remains contained at 4 percent. According to the IMF, while lower oil output and oil prices will likely result in smaller fiscal and current account surpluses in 2013, they will remain substantial,” said Callen according to a press release. <\/p>\n
Callen also said job creation for the growing Saudi population remains a priority to the government. According to him, the number of initiatives to increase private sector jobs and offer help to those who are looking for work. <\/p>\n
“Ultimately, increased employment of Saudis in the private sector will require a combination of reduced reliance on jobs in the public sector, measures to increase the competitiveness of Saudi workers in the private sector including through continued efforts to strengthen education and training, and expanded opportunities for women,” said Callen.<\/p>\n
According to the release, the IMF executive said the Saudi government is investing in infrastructure, particularly transportation, and adopt a series of measures required to strengthen small and medium businesses. <\/p>\n
Callen also discussed increased energy consumption in Saudi Arabia due to the growing population. “The government is responding by improving energy efficiency and developing alternate energy sources. Nevertheless, the IMF mission considers that an upward adjustment of energy prices over time will likely be needed to curb the growth of domestic energy consumption.”<\/p>\n
To the fund, Saudi Arabia must beware of inflationary pressure. “The government’s fiscal policy looks set to appropriately slow the pace of spending growth this year after the large increases in 2011 and 2012. This will help contain demand pressures,” said Callen.<\/p>\n
“The fiscal position is very strong. In recent years, the government has run large budget surpluses, reduced debt to very low levels, and built up considerable financial assets. Budget management has been considerably strengthened. From this position of strength, now is a good time to consider further fiscal reforms. In this context, we encourage the government to further develop fiscal tools, including those dealing with oil price uncertainty,” said the mission chief according to the press release.<\/p>\n
*Translated by Gabriel Pomerancblum<\/strong><\/p>\n