Saudi Arabia’s economy grew 7.1 percent last year, while its non-oil sector accelerated 8 percent, the highest since 1981, the International Monetary Fund said.
“Economic performance has been exceptionally strong and the outlook remains buoyant,” Masood Ahmed, the IMF’s Middle East direct said in a statement on the Washington-based organisation’s website.
“Oil production has been raised to ease pressures on global oil prices, and increased government spending coupled with accommodative monetary policy has supported continued acceleration in non-oil activity.”
The kingdom, which has one-fifth of the world’s proven oil reserves, and maintains the world’s largest oil production capacity, increased its output to 10.1m bpd this month, the highest in decades, according to Reuters.
Saudi Arabia has increased capacity to make up for shortfalls brought on by a decline in Libyan output and infrastructure constraints in Iraq.
“Higher imports and increased workers’ remittances linked to the strong growth of the Saudi economy, together with expanded financial assistance have exerted a positive spillover and helped support other economies in the region and beyond,” Ahmed said.
The kingdom’s economy is projected to grow by 6 percent this year with inflation forecast at 5 percent, according to the IMF.
“Fiscal and external surpluses are expected to remain very strong at almost 17 and 27 percent of gross domestic product, respectively,” Ahmed said. “However, given the current external environment and possible spillovers to global oil markets, the outlook is subject to some uncertainty,” he added.
Accelerating the pace of reform, and continuing to diversify the economy will help sustain growth in the future as the kingdom remains dependent on oil exports, and growth has been driven mainly by factor accumulation, Ahmed said.