Strategic Gears’ Annual Saudi Arabia Economic Outlook report examines the Kingdom’s macroeconomic performance and outlook for growth, fiscal policy, inflation, the labour market, the external sector, the overall business environment, and reform momentum.
Using data from the recently released Saudi budget for 2023 as well as others from the Saudi Ministry of Finance and the IMF, Strategic Gears’ experts review the Kingdom’s performance in 2022 and outlook for 2023, as well as the progress of transformation plans as part of the government’s Vision 2030 strategy and things to watch next year.
The report concludes that Saudi Arabia’s growth in 2023 will be fuelled by the robust expansion of the non-oil sector and sustained oil activity. The 2023 forecast assumes continued momentum from 2022’s stellar 8.5% growth and expansion in non-oil domestic economic activity in 2023, led by the private sector. This is while many economies globally face more downbeat forecasts including fears of a recession in some. The report however suggests that the risk of re-emergence of COVID variants and global economic recession fears, particularly in the Kingdom’s key trade and FDI partners, are a source of concern.
Overall, fiscal restructuring in Saudi Arabia continues to assist in streamlining operating spending and diversifying income sources. The fiscal balance expects to show a surplus in 2023, and over the medium term until 2025. This would represent the second year of consecutive surplus following 8 years of budget deficits. Public debt is forecast to remain below the government’s debt ceiling of 50%.
Unemployment continues to decline, and female labour force participation continues to grow (the share of women in the labour force has doubled in just four years, exceeding the Vision 2030 target already). However, according to Strategic Gears’ experts, the supply of specialist talent will need to keep up with growing demand and increasing competition for talent between the private sector and government entities/government-owned companies. This could have wide-ranging long-run implications including higher labour costs.
The report concludes that the year 2023 is expected to witness interesting activity in the travel, tourism and hospitality space, entertainment and related industries, progress on green initiatives (as part of the Saudi and MENA Green Initiatives), and the mining industry. More companies are expected to also sign up and shift regional HQs to Riyadh (before the January 2024 deadline.), and IPO and M&A activity are expected to remain hot.
The “Saudi Arabia Economic Outlook 2023” report is available to download here: strategicgears.com/index.php/providers/reports/13-reports/73-saudi-arabia-economic-outlook-2023
