In 2022 and beyond, Saudi Arabia’s economy will boom.
Why?
- Oil revenues have rocketed.
- Reforms took place and the economy recovered quickly after the COVID pandemic of 2020.
- KSA’s GDP has risen by 9.6% in the first quarter of 2022, and it will grow the fastest ever since 1973.
Inflation
Shop prices on imported goods have increased, but the central bank is working to keep inflation low (2.8%).
The country made a lot more money this year from oil and non-oil sales.
The public purses are fat, and government financial reserves are plentiful.
Tightening Controls On Spending
In spite of having surplus funds, this year the Saudi government does not want to spend it all haphazardly.
However, there will be social improvement programs, changes in tax policies, and financial administration.
These changes will focus on new taxation of non-oil activities. In this way, they will try to keep the budget stable.
Also, the Saudi government does not want public spending to exceed oil revenues.
They want to manage oil prices by sensible planning of economic diversification policies.
Domestic Energy Prices
Household utility bills will remain high to deliberately stay on par with international prices. This revenue will also help the government to meet its ‘green’ objectives.
The families hit hard by high fuel prices will be helped with special schemes.
Banks
Strong banking controls and framework regulations mean the financial sector will remain good.
High oil prices will ease the effects of any rising inflation on the economy. Inherent banking risks are low.
PIF
Sovereign funds managers will continue investing in risky, but high-return opportunities.
Private sector investment and involvement in Giga projects will increase.
Drive For Reform
The driving policies behind Vision 2023 will continue to open and free up the Saudi economy leading to more balanced development.
Changes In Business Environment
Today, doing business in the kingdom is easier.
The government reformed the labour market, brought many more women into the workplace, increased the private sector involvement, and more industrial units, and made it easier for people to set up a business.
Employment For Women
New regulations mean that today women can work the same as men. Also, taxi fares for women going to work can be reimbursed and employers receive financial incentives for employing females that include money for childcare.
In 2022, the percentage of working women is 33%, twice that of 2021. This figure is 3% more than the original employment Vision 2030 target.
Digital Technology and Productivity
The output will increase as KSA moves massively in the direction of online and virtual technology.
Young Saudi people are technologically adept. In 2020, legal, and financial health services went online. Schools, colleges, and universities managed and delivered classes online.
Conclusion
High oil prices and tight economic management suggest that the Saudi economy is bouncing back from the economic hits of the last ten years and the COVID pandemic.
The outlook is good.
The fine work will only continue for as long as the government keeps driving forward with its economy, banking, and investment goals and reforms.