Moody’s said Wednesday it raised its economic growth projections for Saudi Arabia for 2023 and 2024 on the expectation that the kingdom’s non-oil private sector activity will remain strong.
Moody’s also affirmed Saudi’s A1 credit rating with a stable outlook, mainly driven by the government’s fiscal policy effectiveness, the credit rating agency said.
This was evidenced by policy responses to both periods of low and high oil prices, which demonstrate a commitment to fiscal consolidation and longer-term fiscal sustainability, the Saudi National Debt Management Center (NDMC) said in a statement.
The Gulf state’s real gross domestic product (GDP) is also expected to continue its growth by 5% on average in the 2021-2023 period, supported by further post-COVID-19 recovery, progress on economic diversification, capital and development projects, and a further easing of oil production cuts.
The agency also noted that the growth of financial institutions in Saudi Arabia highlights the positive impact of the structural measures and reforms taken by the country in the past five years.
Earlier this month, the Riyad Bank Saudi Arabia Purchasing Managers’ Index (PMI) released a survey, which showed the kingdom’s non-oil private sector activity fell to a three-month low in December 2022. However, the companies are confident about the outlook for 2023 due to business picking up late in 2022.
The seasonally adjusted PMI dropped to 56.9 in December last year from 58.5 in the previous month. The recent reading was the lowest since September 2022. However, it is still well above the 50-mark that separates growth from contraction.
Saudi Arabia plans to focus on boosting its non-oil economy this year, Minister of Economy and Planning Faisal Alibrahim said at the World Economic Forum in Davos, Switzerland, last May.
