$1.3tn boost: Vision 2030 to spur trade and finance

The Kingdom’s implementation of reforms envisaged by Vision 2030 will contribute to supporting Saudi Arabia’s net international investment position (NIIP), which is expected to reach $1.3 trillion (77.6 percent of GDP) by 2030, according to economists.
Saudi Arabia’s structural economic transformation, envisaged by Vision 2030, will have significant implications on trade and financial flows over the next 15 years, researchers of Jadwa Investment predicted in a new report released Sunday.
The report titled ‘Vision 2030: A New Trade and Investment Model in the Making’ looks at the evolution of the current account for the period 2016-30, which is forecast to reach a surplus of $135 billion (8 percent of GDP) by 2030.
Structural reforms will lead to non-oil current account inflows rising from $85 billion in 2015 to $262 billion by 2030.
“We forecast non-reserve financial inflows to rise significantly over the next 15 years, as they become driven by reforms in key areas of doing business in the Kingdom such as property rights, labor market regulations, contract enforceability, etc.,” said the report.
“As a result, the non-reserve financial account deficit will gradually diminish over the next 15 years, with the Kingdom attracting more foreign investors and creditors,” it added.
“The anticipated improvement in these inflows will have significant implications on the domestic financial system, as linkages to international financial institutions grow,” the economists said.
“The rising role of non-reserve financial flows will mean that the fixed exchange rate will remain intact and will act as an anchor for stability, supporting a period of rising investment and financing activity,” added the report.
It said the combination of falling assets and rising liabilities led to a decline in the Kingdom’s net international investment position from $792 billion in 2014 to $703 billion in 2015.
“However, in percentage of GDP terms, NIIP has actually continued to grow during 2015, rising to an all-time high of 108.9 percent, up from 105 percent in 2014. We view this as reassuring for the Kingdom’s credit profile, and this reflects an important strength when considering future financing options from abroad.”

Source: Arab News