Saudi Arabia, MENA growth outlook bright despite challenges, ministers say
The future looks bright for Saudi Arabia and other Middle East and North African economies, but governments in the region must be wary of geopolitical instability and inflation to sustain growth, ministers told the World Economic Forum on Thursday.
Saudi Arabia’s Minister of Economy and Planning Faisal Alibrahim took part in a panel discussion on how the MENA region can build an inclusive and sustainable economic future for all of its nations.
He said the Kingdom’s economy was beginning to see results from its Vision 2030 agenda, which led to its economy being one of the fastest growing in the world in 2022.
“Our non-oil activities, the private sector essentially, has grown at a very high rate up until the end of Q3. On a cumulative basis it reached 5.9 percent and before that in Q2 it was even higher. That is one of the highest, if not the highest, rates in 11 years,” he said.
“We will continue our plans to diversify the economy. We were very fortunate that we have seen results of Vision 2030 materialize over the last few years, especially in 2022, and Saudi becoming the global growth story.”
That private sector growth, coupled with an increase in foreign direct investment in new and revived sectors like tourism, culture, sport and entertainment, and mining, were set to deliver long-term prosperity to Saudi Arabia, Alibrahim said.
“We have a very strong fiscal position, a very strong and resilient financial system and a monetary system as well, so we continuously assess if this will impact the private sector, which has been growing consistently and we’ve seen even foreign direct investment grow at 250 percent,” he said.
“The private sector in terms of exports has grown around 20 percent and manufacturing has grown more than 20 percent in the last year.”
Alibrahim said the government’s efforts to make the Kingdom an attractive proposition for foreign direct investment would lead to a “co-creation of value” with its partners.
“We started at 0.7 percent (FDI) and we’re still moving forward. We want to move faster but with the introduction of the National Investment Strategy and with the many trillions that are targeted to be attracted, we’re moving forward,” he said.
“We are trying to build the right business environment in terms of transparency, policy predictability an institutional environment that never existed this well before to attract this FDI.”
Egypt’s Minister of Planning and Economic Development Hala El-Said and Bahrain’s Minister of Sustainable Development Noor Ali Al-Khulaif echoed Alibrahim’s optimism for the region’s economies as they diversify and attract investment, with both highlighting the progress made in their own countries.
But the panelists warned against the threat to growth from looming crises, with geopolitical upheaval and inflation being the most concerning. They also highlighted the need for keeping channels of communication and cooperation open between nations in the region.
“Inflation is one of the things that is a worry not only for Egypt but for all countries … because it is an extra cost on prices to any citizen,” El-Said said.
Al-Khulaif said: “Certainly, the geopolitical situation (is concerning) … but touching on the theme of WEF this year, communication, I’ve seen it a lot this week … this understanding that my own stability and prosperity, really depends on the stability and prosperity of the countries around me.”
“I think there is a huge amount of willingness to communicate and work together toward growth,” she said.