KAPSARC: Saudi economy 60% more resilient to oil market shocks as a result of Vision 2030 reforms

KAPSARC: Saudi economy 60% more resilient to oil market shocks as a result of Vision 2030 reforms

RIYADH — Saudi Arabia’s economy, measured by total gross domestic product (GDP), is estimated to become 60% more resilient to oil price shocks by 2030, according to a new study by the King Abdullah Petroleum Studies and Research Center (KAPSARC). Vision 2030’s economic reforms will make Saudi households’ consumption 40% less volatile, stabilize economic activity, employment levels and household income, improving the overall well-being of households in the long-term. The study, “Resilience of Saudi Arabia’s Economy to Shocks: Effects of Economic Reforms,” employs a KAPSARC model that mimics the economy’s response to external shocks. It uses economic data — GDP, investment, and household income — before and after the implementation of Vision 2030’s economic reforms are completed, such as diversifying the economy away from oil. Ultimately, when simulating economic response, the lower it is to external shocks, the more resilient the economy is. “As expected for the world’s largest oil exporter, oil price shocks are a major source of macroeconomic fluctuations. Ending this vulnerability is the core of Vision 2030, as the Kingdom aims to diversify its economy,” explained Dr. Axel Pierru, KAPSARC’s energy macro & microeconomics program director. Dr. Hossa Almutairi, a co-author of the study, highlighted that “resilience