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Vision 2030 policies ensure Saudi Arabia will become 60% more resilient to oil shocks by 2030: KAPSARC

RIYADH: Saudi Arabia’s economy is expected to become 60% more resilient to oil shocks by 2030, according to a study published by the King Abdullah Petroleum Studies and Research Center, a Riyadh-based advisory think tank.

“What we mean by resilient is how this economy can withstand shocks and recover quickly and quickly after the shock at the same level of growth or even better, and we have found that by implementing the policies of Vision 2030, the Saudi economy will be 60 percent more resilient to shocks by 2030,” Hossa Almutairi, researcher at KAPSARC and co-author of the study told Arab News.

Almutairi pointed out that an advanced economy is driven by household spending, and when households have a clear vision of the future, they invest even more in it.

“In a more stable economy, you have a stable income. It’s harder to plan for the future if you don’t know what’s going to happen and if you’re not sure about the future,” she said.

Almutairi believes that a stable economy will also translate into growing business demand, saying, “It’s a continuous cycle that will affect household incomes and job creation.”

The study indicates that economic reforms will make Saudi household consumption 40% less volatile.

According to a report by the International Monetary Fund, the Kingdom is expected to be one of the fastest growing economies in the world this year, thanks to sweeping business-friendly reforms and a sharp rise in oil prices as well as to the recovery of productive power after a pandemic-induced recession in 2020.

Gross domestic product is expected to rise 7.6%, the fastest growth in nearly a decade, the IMF reported.

According to Almutairi, much of this growth was due to growing oil revenues as well as increased government spending.

“This growth is driven by activity in the oil sector, and government spending also increased by 10% in the first quarter of 2022, compared to the same period in 2021,” she said.

Oil revenue for the first half of 2022 was SR434 billion ($115.7 billion), compared to SR248.7 billion in the first half of 2021, an increase of 75%, according to Zawya.

Non-oil revenues have also increased by 5% this year, Almutairi said, which aligns with the Kingdom’s long-term economic diversification goals.

“The non-oil sector contributed to the growth and you see non-oil revenue was up 5%,” she said.

According to Almutairi, oil will remain a major economic resource for the Kingdom as the economic reforms of Saudi Vision 2030 are not about abandoning oil but rather focusing on diversifying the economy.

“In the most ambitious scenario for climate change, which is the International Energy Agency’s net zero scenario that was released last year, oil will remain at 24 million barrels per day in 2050. The So the world still needs oil, and Saudi Arabia has some of the lowest oil production costs. What I mean is that oil will be part of economic activities,” she said. .

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