Saudi finance chief says economy more resilient to global shocks

Saudi Arabia has made its economy more resilient by identifying risks from global shocks quickly, Finance Minister Mohammed al-Jadaan said.

While the US, Europe and China are at risk of a slowdown, higher oil prices have helped the world’s largest crude exporter to channel its wealth into stocks and other assets.

“What you need is a plan, focus and execution and then you need to deal with a crisis,” Jadaan told Bloomberg Television in an interview at the kingdom’s Future Investment Initiative in Riyadh. “You need to make sure you mitigate early, you are ahead of the curve, as we have done over the past couple of years to make sure you are protected from these shocks.”

The kingdom has its lowest unemployment rate in two decades and has managed to keep inflation at 3 per cent, he said. The economy is forecast to grow 7.6 per cent this year, faster than any other member of the Group of 20, according to the International Monetary Fund.

Earlier this month, OPEC+ – a group of oil producers led by Saudi Arabia and Russia – opted to cut output. While the decision infuriated the White House, the Saudi government said it was necessary to counter a potential worldwide recession.

Jadaan said US-Saudi relations were historically very strong and people shouldn’t be “distracted by the noise.” Instead, the focus needs to be on investment growth showcased at the Riyadh conference, he said.

Saibor surge

The minister said there was still plenty of liquidity in Saudi Arabia’s financial system. Some investors have expressed concern that the local interbank rate, known as Saibor, has soared this year.

The 12-month rate climbed to more than 6 per cent this week, the highest in over a decade. But Jadaan said there’s plenty of liquidity coming in from the government and investments.

Non-oil growth will reach 5 per cent or more in the coming years, in line with Crown Prince Mohammed bin Salman’s Vision 2030 plan to diversify the economy from petroleum, the finance minister said.

“In Saudi Arabia we have been planning for years,” he said. “We are seeing the results.”