Saudi Arabia Pledges To Invest Oil Export Windfall In Economic Reforms

6 May 2022 Issue: 65 / 18 By: Jamie Ingram

Spurred on by a booming oil sector, Saudi economic growth is at its highest level in 11 years as its dependence on oil shows little sign of abating. The challenge for the government is to invest the windfall in successfully diversifying the economy.

Saudi Arabia’s economy is booming, with GDP in the first quarter of the year growing at the fastest pace since 2011. Unsurprisingly, the surge has been driven by resurgent oil markets, as the fallout from Russia’s 24 February invasion of Ukraine has pushed oil prices above $100/B for the first time since 2014.

The kingdom launched its Vision 2030 program to diversify the economy in 2016 (MEES, 29 April 2016), but the latest government figures underline the scale of the challenge. Real term year-on-year economic growth was 9.6% in Q1, thanks to a massive 20.4% growth in the oil sector – both were the largest growth figures since 3Q 2011 – while non-oil growth fell to 3.7%, the lowest figure since 4Q 2020 (see chart 1). (CONTINUED - 752 WORDS)