Moody’s: Saudi Economy Set to a Faster Growth Rate Next Year

Moody’s: Saudi Economy Set to a Faster Growth Rate Next Year

Highlights





Moody's expects growth to be at double the 2015-2019 rate















Saudi Arabia's low debt and robust balance sheet are among its key credit strengths according to a report from Moody's, the credit ratings agency.

A large stock of proved hydrocarbon reserves with low extraction costs and prudent financial system regulation also support the sovereign credit profile, it said.

But significant challenges remain for the country that has been hit by the double blow of the pandemic at a time of weak oil prices.

"The Saudi government has made some initial progress in its ambitious and comprehensive reform plans to diversify fiscal revenue streams and the economy away from hydrocarbons,“ said Alexander Perjessy, a Moody's vice president. "However, their full implementation will be challenging and their positive impact will only be felt over the longer term.“ 

Still, the economy is expected to grow at an average rate of around 3 percent during 2021-24, which is nearly double the average during 2015-19 (1.6 percent) but lower than the 4.1 percent growth rate recorded during 2005-14. 

Moody's expects real GDP to decline by 4.5 percent in 2020 and higher fiscal deficits in the coming years that will increase government debt