S. Arabia now world’s fastest growing economy

Saudi Arabia has recently emerged as the fastest growing major economy in the world, with its non-oil sector exhibiting a surge in growth rates. The country’s non-oil economy grew by an impressive 6.2% in the last quarter of 2022, according to the General Authority for Statistics, which is the highest it has been in more than a year. Meanwhile, the oil economy showed a growth rate of 6.1%.

Overall, the kingdom’s economy experienced an estimated growth of 8.7% last year, a figure that aligns with the International Monetary Fund’s (IMF) forecasts. This places Saudi Arabia significantly ahead of India’s growth rate of 6.8%.

At the World Economic Forum in Davos earlier this year, IMF head Kristalina Georgieva noted that the IMF was observing Saudi Arabia’s growth rate with gratitude, considering it as a positive for the world economy. The country is experiencing some of its fastest economic growth in decades, largely due to a windfall from the sale of oil, which has risen in price due to the ongoing conflict in Ukraine.

While much of the world is bracing for a possible recession, the kingdom has managed to sidestep the worst of global inflation and has used its oil boom to fund major projects, including the $500bn Neom mega-city, a new airport in Riyadh, and the Red Sea Project.

The kingdom is also pursuing investments in a wide range of sectors, from minerals and mining assets to technology and entertainment, including the acquisition of the British football club, Newcastle United, in 2021. The Public Investment Fund, chaired by Crown Prince Mohammed bin Salman, is leading the charge in diversifying the country’s economy away from its reliance on fossil fuels.

Despite the IMF’s praise for Saudi Arabia’s efforts to diversify its economy, the fund’s recent downgrade of the country’s 2023 growth highlights that fossil fuels continue to play a dominant role. The IMF now predicts that the kingdom’s growth rate will be 2.6% this year, underperforming the wider region, and marking a drop of 1.1 percentage points from the fund’s October estimate. The IMF cites lower oil production as the main reason for this downgrade, but also notes that non-oil growth is expected to remain strong.