In a fresh boost to the economic prospects of the Kingdom, Standard & Poor’s has upgraded Saudi Arabia’s credit outlook from stable to positive. The rating agency announced over the weekend that the change reflects forecasts of strong non-oil sector growth and the resilience of the kingdom’s economy.
The agency’s positive outlook means that Saudi Arabia can do more via further reforms and investments to help expand its non-oil economy. This also underlines the capacity of the country to handle the ongoing fluctuations within the oil and gas industry.
According to S&P, it is expected that there will be quicker investments in tourism and other emerging sectors that will further enhance the diversification of Saudi Arabia’s economy from its high dependence on hydrocarbons. The kingdom, currently the world’s largest exporter of oil, is pushing an economic transformation through its Vision 2030 reform program aimed at increasing economic growth. S&P comments that continued implementation of Vision 2030 initiatives is expected to support strong non-oil growth in the medium term.
In other words, in spite of this drive on diversification, the oil and gas industry, together with Aramco, will continue to be central in driving the petrol-based sectors of the Saudi economy.
As a whole, Saudi Arabia has been spared of very high inflation rates compared with the rest of the world. S&P projects that it will remain steady, and likewise believes that interest rates will continue to follow those decisions passed by the U.S. Federal Reserve.
It confirms the credit ratings of Saudi Arabia at A/A-1, reflecting continued confidence in the economic strategy and stability of the kingdom.
