From 2021 onward, Saudi Arabia's gross domestic product is expected to rebound as oil prices and the volume of its energy exports climb, says S&P Global Ratings.
The kingdom, the biggest Arab economy, is currently facing economic headwinds like other oil-producing countries due to the twin shocks of the COVID-19 pandemic and lower oil prices, the rating agency said in a report released on 27 September.
S&P affirmed Saudi Arabia’s 'A-/A-2' sovereign credit rating with a stable outlook thanks to the country’s strong net asset positions and its economic prospects over the next three years.
“The sovereign's sizable fiscal and external buffers should help enable [the kingdom] to weather it [the lean] period,” S&P’s primary credit analyst Ravi Bhatia said.
“The economy should begin to rebound from 2021 on, as global [economic] conditions improve.”
The stable outlook of Opec’s top oil exporter reflects continued ratings support from the kingdom’s “relatively strong government and external balance sheets”.
While Saudi Arabia’s real GDP is estimated to contract by 4.5% this year due to the pandemic and the related economic challenges, it is expected to grow, averaging 2.4% over the 2021-23 period, the agency said.
Saudi Arabia is in the midst of a major economic overhaul known as Vision 2030, which aims to cut the kingdom’s dependence on the sale of oil for revenue.
S&P said it expects the government to continue pursuing its Vision 2030 programme “in the medium term” despite current economic pressures.