Is the global economic outlook bleak? Saudi Arabia, the Middle East's local tycoon, is expected to "make a fortune in silence"

AP, April 20 (Editor Xiaoxiang) Affected by the conflict between Russia and Ukraine, the International Monetary Fund (IMF) significantly revised down its forecast for global economic growth this year in its latest global economic outlook released on Tuesday. However, in this latest forecast with a rather pessimistic overall tone, a few economies are expected to "swim against the current" and achieve good results. Saudi Arabia, the largest oil producer in the Middle East, is undoubtedly one of them.

According to the latest forecast of IMF, high oil prices are expected to push Saudi Arabia's economy into a high-speed growth mode this year. The IMF set the GDP growth forecast of Saudi Arabia at 7.6% this year, 2.8 percentage points higher than the original forecast. This figure more than doubled the GDP growth rate of Saudi Arabia last year, which was 3.2%.

Among the major economies, the IMF's forecast of Saudi Arabia's economic growth this year is the highest except India. The IMF expects India's GDP growth to reach 8.2% this year.

Although the optimistic forecast of Saudi Arabia's economic growth is largely attributed to the oil price, which has risen to the highest level in many years, the IMF has also noted the growth of non oil industry revenue in the country, and expects that this part of revenue may rise further.

The IMF said in its global economic outlook report, "We will increase the estimate of Saudi Arabia's economic growth rate by 2.8 percentage points this year, which reflects the increase of the country's oil production according to the OPEC+agreement, as well as the higher non oil output than originally expected."

The oil industry is an important pillar of the Saudi economy. Since the beginning of the year, the price of Brent crude oil, an international benchmark, has risen sharply from about US $75 at the beginning of the year to around US $110 due to the strong market demand and the black swan incident such as the Russia Ukraine conflict, which has greatly boosted the oil export revenue of Saudi Arabia and other OPEC oil producing countries.

The Saudi Arabia National Development Fund has also recently launched a new strategy, which proposes to invest more than 570 billion Saudi Riyals by 2030, tripling the proportion of non oil industries in GDP.

Crown Prince Mohammed of Saudi Arabia once said that "the new strategy aims to support the goal of sustainable economic development, reduce dependence on the oil industry, and contribute to the realization of the 2030 vision".

Kaitou Macro: Saudi Arabia may further increase crude oil production

At present, not only the IMF is optimistic about Saudi Arabia in the latest global economic outlook report, but also some well-known industry institutions are optimistic that Saudi Arabia is expected to make a fortune in this geopolitical turmoil.

James Swanston, an economist at Capital Economics, wrote in the latest report released this week, "We expect the Saudi economy to grow by 10% in 2022 and 5.3% in 2023."

The report pointed out that since the end of the latest wave of Omikjon epidemic in Saudi Arabia in January 2022, the country's non oil industry has recovered strongly.

According to the macro forecast of Capital Investment, Saudi Arabia's oil production in March is expected to increase to 10.3 million barrels/day, a year-on-year increase of 26.7%, which will also be the fastest growth rate since 2003. Kaitou Macro asserts that Saudi Arabia will further increase its oil production in the future - probably more than the current OPEC+agreement.

The report added that the increase in oil production may also provide more space for the Saudi government to relax fiscal policy and support the recovery of non oil sectors.

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