On November 12, 2017, cars travel past the King Abdullah Financial District in Riyadh, Saudi Arabia. Faisal Al Nasser/Reuters Reuters, DUBAI, July 8 – Saudi Arabia’s economy is rebounding well from the COVID-19 pandemic, according to the International Monetary Fund, which expects the non-oil sector to rise by 4.3 percent this year, with overall GDP growth of 2.4 percent. According to the IMF, real oil GDP is likely to decline by 0.4 percent, as production is expected to remain consistent with the OPEC+ agreement between the Organization of Petroleum Exporting Countries (OPEC), Russia, and allies. Saudi Arabia, the world’s largest petroleum exporter, was battered by last year’s unprecedented oil price drop and the impact of the COVID-19 pandemic, though the economy began to show signs of improvement by late in the year. According to the IMF, investment by the kingdom’s sovereign wealth fund, the Public Investment Fund, is expected to offset the drag on GDP caused by government fiscal restraint. The PIF’s investments are an important aspect of the country’s Vision 2030 economic development plan, which intends to wean the economy off oil. Given the expanding role of the Public Investment Fund and public-private partnerships (PPPs) in the economy, the IMF’s executive directors “emphasized the significance of monitoring fiscal risks and creating a solid sovereign asset-liability management framework.” The Saudi riyal’s peg to the US dollar, the directors concluded, “continues to serve the economy well given the current economic structure.” “While fully agreeing with this, several directors also urged the government to reassess the peg in the longer term to ensure that it stays acceptable in light of the economic diversification objectives.” Yousef Saba and Davide Barbuscia contributed reporting.
Chris Reese and Giles Elgood edited the piece.
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