Saudi Arabia saw the signs of inflation in July 2021 and took action to reduce the impact, the positive signs of which are visible in the economy today, Finance Minister Mohammed al-Jadaan said during a WEF Davos panel on Wednesday.
Al-Jadaan appeared on a panel that looked at how the country’s economy is navigating global challenges including energy insecurity and supply chain fragmentation, driven by events such as the Russia-Ukraine war which has contributed to rising inflation and food prices across the world.
“We saw inflation earlier than what a lot of people anticipated by July 2021… and we said, ‘we need to do something to protect the economy,’” al-Jadaan said on the panel with participants that included Saudi Ambassador to the US Princess Reema bint Bandar and IMF Managing Director Kristalina Georgieva.
Some of the actions the country took included freezing the cost of fuel, the minister said, adding that the likelihood of inflation being high “next year” is low.
“There is a lot of work being done to insulate the Saudi economy. This also helps the global economy,” the minister added.
“We want to be a role model for the region. We are encouraging countries around us to make reforms, and we are helping them with aid.”
The minister also said that the government used to give direct grants and deposits without strings attached, adding that the Kingdom is now changing that approach.
Meanwhile, Georgieva praised the Kingdom’s economy and recent changes, including the VAT increase from six percent to 15 percent, which came into force in July 2020.
As well as praising the country’s change in fiscal policy, Georgieva also lauded the country for actions taken to address food and energy insecurity, its increase of the percentage of females in the workforce, as well as investments it is making to secure economic stability in the future.
The Kingdom leads IMF world economic growth outlook projections for 2023 out of all Middle Eastern and Central Asian countries. The body also said in a separate report that Saudi Arabia was likely to have been one of the world’s fastest growing economies in 2022.
As part of Saudi Arabia’s plans to stop relying on oil revenues for income, the country is plowing on with its Vision 2030 by boosting industries such as gaming and e-sports.
Last year, for instance, Saudi Arabia announced plans to invest 142 billion riyals ($38 billion) in gaming companies through state-owned company Savvy Games Group.
The country is also continuing with its development of the futuristic city NEOM.