Saudi Press: Saudi Arabia’s Non-Oil Economy Growth Rates Increase from 0.2% in 2016 to 5.4% in H1 2021

Riyadh, Saudi newspapers highlighted in their editorials today a number of issues at local, regional and international arenas.

Al-Eqtisadiah newspaper reported in its editorial that Saudi Arabia’s leadership, under the supervision and follow-up of His Royal Highness Prince Mohammed bin Salman bin Abdulaziz Al Saud, Crown Prince, took a decision to shift towards economic diversification, and develop the non-oil sector in order to enable it to play its primary role to economic growth and business sustainability.

This decision was considered as a challenge since the growth rates of the non-oil economy did not exceed 0.2% until 2016. Additionally, there is little hope that the non-oil economy will grow rapidly in light of an economy that fully depends on oil, according to global experiences. Nevertheless, this challenge has become a reality in a short time, and an exciting experience.

In a recent statement, Minister of Finance Mohammed Al-Jadaan said that the growth of the non-oil economy was about 3.3% in 2019, and continued its strong growth until it reached 5.4 % during the first half of 2021.

The newspaper further said that the Saudi experience in supporting the growth of the non-oil economy will remain a subject of study and global attention, as there are many countries in the world facing the same circumstances that Saudi Arabia met in 2015 and the problem of relying on a single source of income. Additionally, these countries aspire to understand and benefit from the Saudi experience in this regard.

According to the Minister of Finance, there are several factors that enabled the Saudi economy to overcome its basic challenges, and even the impacts of the novel Coronavirus (COVID-19) pandemic. The first factor is the modern methods of public financial management and spending control through the electronic financial services platform “Etimad”, which facilitated financial transactions procedures for the public and private sectors. According to the figures, the platform received a total of 623,000 payment orders, worth over SAR 575 billion. Etimad finalized the disbursement procedures for approximately SAR 568 billion, or 98% of the payment orders in less than 15 days. This supported the business of the private sector and boosted confidence in the government, which encouraged investments, and thus contributed positively to the growth rates.

The second factor is the development witnessed by the financial and debt markets, and institutional financing. The total number of companies and funds listed in the Saudi Stock Exchange increased by 7.6% to reach 213 companies, compared to 198 companies in 2017. On the other hand, foreign investors’ ownership in the Saudi financial market increased by 195.9% to reach SAR 208 billion by the end of the year 2020, compared to less than SAR 70 billion in 2017. Additionally, the volume of the local secondary debt market was less than SAR 10 billion in 2019 and then exceeded SAR 70 billion by the end of 2020.

The initiatives to support companies come as a third factor to stimulate the growth of the non-oil sector. The government’s indirect lending initiative for small and medium enterprises (SMEs) helped provide SAR 642 million of financing. This is in addition to supporting bank facilities by more than 50 billion during the COVID-19 crisis.

The newspaper concluded that these three factors contributed to the strong growth of the non-oil sector and fostered other main objectives. They contributed to the creation of the desired economic diversification, and non-oil revenues grew from SAR 166 billion in 2015 to SAR 369 billion in 2020. In addition to all this, the state’s public deficit was reduced from 15.8% in 2015 to 4.5% in 2019, and accordingly, it is expected that the public finances will achieve a balance in 2026, or in a closer date.

Source: Saudi Press Agency