<a href="https://www.thenationalnews.com/business/economy/2024/03/16/sp-affirms-saudi-arabias-stable-outlook-on-economic-and-social-reforms/" target="_blank">S&P Global Ratings</a> has revised Saudi Arabia’s forecast to positive from stable on Friday, reflecting <a href="https://www.thenationalnews.com/business/economy/2024/09/04/saudi-arabia-non-oil-growth-to-moderate-in-2024-imf-says/" target="_blank">the kingdom’s sustained reforms momentum</a>, strong non-oil growth outlook and economic resilience. The ratings agency said the positive outlook reflects <a href="https://www.thenationalnews.com/business/economy/2024/08/22/saudi-arabias-new-laws-to-help-attract-more-investment-into-the-country/" target="_blank">the Saudi government’s </a>potential to bring in more reforms and investments, contributing to the development of <a href="https://www.thenationalnews.com/business/energy/2024/08/16/saudi-arabia-to-cut-oil-spending-as-focus-shifts-to-non-oil-economy-in-1tn-splurge/" target="_blank">non-oil economy</a>. The upgrade also reflects the country’s economic resilience against volatility stemming from the hydrocarbon sector. The agency also affirmed Saudi Arabia’s ratings at A/A-1 because of the kingdom’s continued efforts in comprehensive reforms and investments. “The positive outlook reflects the potential that the Saudi government's wide-ranging reforms and investments will underpin the development of the non-oil economy while upholding sustainable public finances,” S&P said on Friday. “We expect to see an acceleration of investments to develop newer industries, <a href="https://www.thenationalnews.com/travel/2024/09/11/saudi-arabia-travel-airlines-flights-wizz-air/" target="_blank">such as tourism</a>, and diversify the economy away from its primary reliance on the upstream hydrocarbon sector. Current investments will spur consumption by the kingdom's over 35 million (largely young) population and increase the productive capacity of sectors such as manufacturing, logistics, and mining.” Saudi Arabia, the world’s leading oil exporter, is focusing on<a href="https://www.thenationalnews.com/business/travel-and-tourism/2023/10/25/saudi-arabia-expects-nearly-100-million-tourist-visits-this-year-minister-says/" target="_blank"> diversifying its economy away from oil</a>, supporting the development of sectors including technology, property, tourism and infrastructure as part of Vision 2030. The kingdom aims to generate employment and help its non-oil economy to grow. Non-oil growth in the Arab world’s largest economy is projected to increase to 4.4 per cent in the medium term after moderating to 3.5 per cent this year. This is mostly driven by stronger demand as the kingdom implements its Vision 2030 plan, the <a href="https://www.thenationalnews.com/tags/imf/" target="_blank">International Monetary Fund</a> said earlier this month. Saudi Arabia’s economy is projected to grow to 4.7 per cent in 2025 before averaging at 3.7 per cent in the following years. Non-oil gross domestic product grew by 3.8 per cent last year, driven by private consumption and non-oil investment. The kingdom’s real GDP declined 0.4 per cent on an annual basis in the second quarter of this year in what was its best reading since the third quarter of 2023, the General Authority for Statistics showed. Oil growth fell by 8.5 per cent, compared to 11.2 per cent the previous quarter. Real GDP this year is forecast to grow by 1.7 per cent, before increasing to 4.7 per cent in 2025. In June, Saudi Minister of Investment Khalid Al Falih said the kingdom was more than halfway through implementing Vision 2030. Finance Minister Mohammed Al Jadaan said this year the timetable and size of some of the projects under Vision 2030 would be adjusted owing to economic and geopolitical challenges. S&P said continued execution of Vision 2030 initiatives will support strong non-oil growth over the medium term, with the recalibration of some large infrastructure projects expected to contain pressure on Saudi Arabia's public finances. The agency forecast that the kingdom’s GDP would continue to grow during the years 2024-2027, based on the growth in investments in the non-oil sector, the rise in consumption rates and its expectation that the country will emerge in the long term as a more diversified economy, with more job opportunities for young people and broader workforce participation. “Even as the government and the Public Investment Fund accumulate higher debt, we expect the government will remain in a strong net asset position of above 40 per cent of GDP through 2027,” S&P Global said. Inflation has remained relatively low in Saudi Arabia compared to global levels. Annual inflation is projected to fall to 1.9 per cent by the end of the year, compared with 2.3 per cent last year. S&P said it expects inflation to remain steady and that interest rates will broadly move in tandem with the US Federal Reserve rates.
