Saudi Arabia says it will rely on fiscal loosening to balance out the tight
monetary policy imported from the US Federal Reserve, the Minister of Economy
and Planning fiscal liberal whom told us the kingdom is also closely watching the
effects of turmoil in global banking. We're still assessing
what the impact of the recent events in the financial market would be.
And I think it's been up and down and changing dramatically, sort of closely
monitoring that. But taking a step back.
You know, the World Bank, the IMF had certain views on the global economy.
We don't necessarily disagree with that. We believe Saudi Arabia will be able to
achieve its target of three point one and forecasted at the budget
announcement of three point one percent to total GDP.
And we were focusing more on normal activities growth than we think and
planning to make sure that they grow at the same pace we saw in 2022 or faster
because of the change in oil. I think inflation wise, the story has
shifted a little bit in the last few weeks.
First in the US when we saw the numbers and then when we saw the announcement
with the hikes. And then in Europe more recently, while
there are pockets where inflation is being controlled, it's not necessarily
related to energy prices. So this makes us think about what kind
of inflation impact will have on our economy.
That said, I think Saudi Arabia has witnessed top line inflation
decelerating a little bit in terms of its piece last month by point three
percentage points. And we think overall, globally, even the
foods specifically on food products, it will normalize and it will be in a
better position. We're still monitoring what that will
have as an impact in terms of our own inflation rates.
And we're intervening like we did nine months ago as needed.
With oil having come off, that is significantly.
Are you reassessing at all yet the projections for the budget surplus for
2023, or are you still confident that that number is going to hold throughout
the course of the year? We think long term we focus in terms of
the oil market on a long term market stability as we've discussed.
But we're thinking very long term and I can't be very frank with you.
We always assess different scenarios and look at what the outcomes are, the
implications can be. And we we are just as needed.
We believe it's too early to tell. And we feel very confident in the long
term view that we had earlier. And you mentioned economic growth here
in Saudi Arabia. Obviously, the pace of expansion has
been very fast. Is growth fast enough to achieve all of
the big ambitions that the country has? Or is there still more that you want to
do to boost the pace of growth to meet your goals?
So last year we witnessed a growth GDP growth rate of eight point seven
percent. During the year, certain quarters even
achieved a non oil activities growth. It has never been witnessed this much in
the last 11 years. So overall, mental activity is growth
has been definitely want to unlock more avenues for growth.
And that's part of what we are doing in day in and day out.
We think the upside on tourism, the upside in the new industrial strategy
and focusing on export driven approaches, but also the supporting and
enabling sectors such as logistics and the progress we're witnessing where
we'll see a huge upside for the private sector.
PMI, as you saw last month at fifty nine point fifty eight point nine.
I can't recall exactly the pace in eight years.
There's only signaling that the private sector is betting more on the Saudi
economy. And we think that we are going to see
further upside. Moving forward, what can you do?
We're out the financial sector conference now.
There's obviously a big gap between the funding required for all the projects,
all of the investments that have been announced and the scale of the Saudi
banking system. What do you do to bridge that gap?
There is there's always. We have plans to bridge all the gaps
that we could be facing.
I think the depth of the financial sector of the private sector has
witnessed a lot of progress in terms of governance, but also in terms of
complexity of the products that are available.
And we're only getting started. There's a continuous discussion, debate
in the government. How can we turn the financial sector?
So it is deeper. Of course, you're witnessing an
expansionary fiscal regime that is creating a lot of growth, that is
attracting a lot of companies operations and people are deposit base is growing
as well. So we believe overall there will be more
and more opportunities to more sustainably fund all of these
projects as we go forward. We're very confident in their ability to
fund everything we set out to do till 2013.
And how are you going to be looking at allocating both the surplus from last
year and the anticipated surplus for 2023?
As we said before, we've discussed this before, Matthew, either replenishing
reserves, paying off debts early, building up the savings again, or
accelerating some one off investments that were slowed down on its strategy
slowed down because of. Covid ultimately,
this windfall or this surplus will continuously be managed in a certain
way, certain layers cause a call for certain governance procedures for us to
enact to prioritize where the remaining funds go.