Moody’s projects Saudi economy to grow 3.9% by 2026

RIYADH, The Gulf Observer: Moody’s credit rating agency expected that Saudi Arabia’s economy would register an average growth rate of around 3.9 percent during the period from 2022 to 2026.

Moody’s issued an annual in-depth credit analysis report which elaborates on Saudi Arabia’s credit profile in terms of economic strength, institutional and governance strength, fiscal strength, and susceptibility to events’ risks with the ability to avoid or minimize their impact, which are the four main analytic factors in the agency’s Sovereign Credit Ratings Methodology.

The report highlighted that Saudi Arabia’s credit strengths are derived from its robust government balance sheet, underpinned by moderate debt levels and substantial fiscal reserve buffers, in addition to large stock of proven hydrocarbon reserves with low extraction costs and prudently regulated financial system which strengthens its sovereign credit profile.

Elaborating on the factors of its medium-term growth projections, Moody’s mentioned the continuity of the government’s commitment to further fiscal consolidation despite elevated oil prices, the slow growth of oil production, the continuation of diversification projects with the critical mass moving into the implementation/construction phase in the next several years, and the structural economic, legal and social reforms that the government has been implementing to improve the business environment in Saudi Arabia that will begin to bear fruit in the form of higher private sector investment growth.

It is noteworthy that Moody’s updated its credit report for Saudi Arabia last month, affirming its “A1” rating for the Kingdom with a stable outlook as a result of the government’s commitment to fiscal consolidation and continuous structural measures and reforms toward long-term fiscal sustainability.