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Vision 2030 policy secures Saudi Arabia 60% more resilient to oil shocks by 2030: KAPSARC
Riyadh: Saudi Arabia’s economy is expected to be 60 percent more resilient to oil price shocks by 2030, according to a study released by the King Abdullah Center for Petroleum Research and Research, a consultancy think tank based in Riyadh.
“By resilience, we mean how well this economy can withstand shocks and quickly recover to the same or better growth after a shock, and we found that by implementing the policies of Vision 2030, the Saudi economy will reach 60 to 2030, which is very important for the economy. % more resilient to shocks,” Hossa Almutairi, a researcher at KAPSARC and co-author of the study, told Arab News.
Almutairi stressed that developed economies are driven by household spending, and when households have a clear vision for the future, they invest more.
“In a more stable economy, you have a stable income. If you don’t know what’s going to happen, it’s more difficult for you to plan for the future, and you have uncertainty about the future,” she said.
Almutairi believes a stable economy will also lead to growing demand for businesses, saying: “It’s an ongoing cycle that will impact household incomes and job creation.”
The study showed that economic reforms would reduce the volatility of consumption by Saudi households by 40 percent.
According to a report released by the International Monetary Fund, the economic recession in 2020 stems from the pandemic-induced recession due to sweeping pro-business reforms, a surge in oil prices and production capacity.
Gross domestic product is expected to grow by 7.6%, the fastest pace in nearly a decade, the International Monetary Fund reported.
According to Almutairi, a major part of this increase is due to higher oil revenues and higher government spending.
“The increase was driven by activity in the oil industry, with government spending up 10 percent in the first quarter of 2022 compared to the same period in 2021,” she said.
According to Zawya, oil revenue in the first half of 2022 was 434 billion riyals ($115.7 billion), compared with 248.7 billion rials in the first half of 2021, an increase of 75%.
Non-oil revenue also rose 5 percent this year, in line with the kingdom’s long-term economic diversification goals, Almutairi said.
“The non-oil segment contributed to the growth, and you’ll see a 5% increase in non-oil revenue,” she said.
Oil will remain Saudi Arabia’s main economic resource, as the economic reforms of Saudi Vision 2030 are not about abandoning oil, but focusing on economic diversification, Almutairi said.
“In the most ambitious climate change scenario, the net zero scenario released by the International Energy Agency last year, oil would remain at 24 million barrels per day by 2050. So the world still needs oil, and Saudi Arabia already has the lowest production cost. My view is that oil is going to be part of economic activity,” she said.
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