Saudi GDP predicted to grow to highest record in 10 years

Saudi Arabia’s gross domestic product (GDP) is expected to grow at the highest rate in 10 years to 7.5 per cent in 2022, with an expected surplus in the state’s budget of about 6.3 per cent, according to credit rating agency S&P.

S&P expects the Saudi economy’s productive capacity to grow in the long run due to the development of general finances and significant economic reforms.

S&P has updated its outlook for Saudi Arabia to “positive” and assessed the Kingdom’s short and long-term foreign and local currency sovereign credit ratings to A-/A-2.

The agency said the positive outlook reflects the kingdom’s strong GDP growth, financial policies and government reform programmes, which aim to diversify the economy.

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In terms of flexibility and performance, the agency expects support for financial balances in the years 2022-2025. This is due to government efforts to develop public finances and a commitment to improving spending policy and raising its efficiency, despite the rise in oil prices.

The agency predicts that the cost of sovereign debt will not rise significantly, given that most of the public debt portfolio is running at a fixed rate.

The agency has also said that inflation rates in the kingdom were relatively low compared to its counterparts, as the government subsidises fuel and food prices as well as tying the local currency with the relatively strong US dollar.