RIYADH: Saudi Finance Minister Mohammed Al-Jadaan is losing no sleep over the price of oil because he believes the Kingdom’s economy remains on track to hit key targets of the Vision 2030 strategy despite a recent downgrade in forecast growth.
Last week, the International Monetary Fund (IMF) slashed its 2019 gross domestic product (GDP) growth predictions for all Gulf countries, but with an especially steep fall for Saudi Arabia. The new IMF projection is for a mere 0.2 percent, down from 1.9 percent earlier this year.
Speaking to delegates at the Future Investment Initiative (FII) in Riyadh, Al-Jadaan said the key focus for the long-term strategy is to grow the non-oil sector of the economy.
“What we’re focusing on is non-oil GDP growth, and the IMF agrees that we’ve maintained that growth at 2.9 percent and that’s our target,” he added.
“Our key performance indicator for Vision 2030 is non-oil GDP and how we’re going to grow it.”
Asked if he was sleeping well despite the volatility in global crude prices, the minister said: “I watch the oil price regularly every day because we have a long-term focus. We want to get out of the interim volatility.”
He added: “I have no trouble sleeping, and I enjoy a good night’s sleep when the oil price is going up — but not too much.”
The IMF said lower oil production was the main reason for its cut in forecast, but added that the attacks on Saudi Aramco facilities at Abqaiq and Khurais in September “add uncertainty to the near-term outlook.”
Al-Jadaan said the IMF action was influenced by the oil market. “This year, Saudi oil production is minus 3 percent because we decided to reduce our oil production so we, and our partners in OPEC+ and the Gulf, make sure there’s a stable market in the world and long-term sustainability for the industry,” he added.
Saudi Energy Minister Prince Abdul Aziz bin Salman earlier told the FII of his strategy for long-term sustainability and profitability in the energy business, with the emphasis on downstream operations and on the “circular carbon economy” to reduced emissions of greenhouse gasses.
Al-Jadaan said the global economic situation had influenced the IMF toward downgrade. “They’re also looking at what’s happening globally, and we’re watching that very closely too so that we’re prepared, and that fiscal and economic policies can respond to these international challenges,” he added.
Al-Jadaan said improvement in the non-oil sector was due to greater competitiveness and structural reform pushed through by the government.
He pointed to the Kingdom’s recent 30-place leap up the World Bank ranking for ease of doing business to No. 62 globally. This improving business environment is being seen in certain sectors of the Saudi economy, he said.
Al-Jadaan highlighted tourism, technology, sports and entrainment as well as construction, where statistics showed a big turnaround to 3 percent growth — the first time there has been such an improvement since 2014, he added.
On an FII panel that also included Bahrain’s Finance Minister Shaikh Salman bin Khalifa Al-Khalifa and his Kuwaiti counterpart Naif Falah Al-Hajjraf, there was agreement that boosting the private sector is the way to go for oil-dependent regional economies.
Al-Khalifa said: “The importance of the private sector is critical for growth. We’re moving from government-led growth to enabling the private sector.”
Al-Hajjraf made an impassioned plea to maintain the economic infrastructure of the Gulf Cooperation Council (GCC) despite the tensions that have led Saudi Arabia, the UAE, Bahrain and Egypt to cut trading links with Qatar.
“What has been achieved in the GCC is too good to let go. We don’t just think of the GCC, we believe in the GCC,” he said.