In parallel with the gradual recovery of the global economy, the local economy has recovered at the level of diverse economic sectors, bolstered by the Kingdom’s rapid response to the COVID-19 pandemic since its onset by managing the consequences of the health crisis. The Kingdom also imposed a multitude of measures and reforms issued by government entities to mitigate the expected effects of the pandemic and ensure the local economy’s stimulation and return to positive economic growth. In turn, this will help economic activities bounce back, including those of the private sector. According to the General Authority for Statistics (GaStat), the GDP grew by 3.2% compared to the previous year, reaching SR 2.614 trillion at constant prices. This is owed to the local economy’s recovery and the return of economic activity to positive levels.

The average OPEC basket price rose by about 69% in 2021 compared to the previous year, as the oil sector inched up 0.2% compared to 2020, and the non-oil sector grew by 5% at constant prices, whereas its contribution to the GDP in 2021 slightly increased to about 57%.

The rise in the non-oil sector is due to the growth in many major economic activities. For instance, other manufacturing industries grew by 12%, wholesale and retail businesses and the restaurants and hotels sector are expected to grow by 9%, financial services, insurance services, real estate, and business services by 6%, and other mining and extraction activities by 6%, and electricity, gas, and water by 2%.

The year 2021 witnessed a slight decline in inflation levels compared to 2020, with GaStat data indicating an annual average consumer price index in 2021 of about 3.1%. This is partially owed to fading impact of the VAT increase that became effective in mid- 2020.

The balance of payments current account, according to the preliminary estimates of the Saudi Central Bank, is estimated to record a surplus of SR 166 Billion by the end of 2021, compared to a deficit of SR 85 Billion for the same period last year. The trade balance at the end of 2021 achieved a surplus of SR 462 Billion, whereas the trade balance minus oil exports recorded a 6% decrease in the deficit by the end of 2021, reaching SR 295.6 Billion, down from about SR 313 Billion in 2020. The value of commodity exports in 2021 was about SR 1,035 Billion as oil exports boomed 69% to SR 758 Billion, and the value of non-oil commodity exports also jumped 36% compared to the year before to approximately SR 277.5 Billion. In addition, the value of commodity imports edged up 11% in 2021 compared to 2020, reaching approximately SR 573 Billion.

The actual state budget figures for 2021 recorded positive results thanks to economic and financial reforms provided by government sectors, the positive response of economic activities during the pandemic, as well as the improvement in oil prices throughout the year. Revenues grew 19% to SR 930 Billion compared to the previous year, whereas annualized expenditure decreased 5.6% to SR 1,015 Billion. The state budget recorded a deficit of about SR 85 Billion, and the ratio of public debt to GDP stood at about 29.2%. These results are the fruit of the Kingdom’s efforts to implement measures supportive of the financial and economic sectors to ensure fiscal sustainability and to continue economic and structural reforms to promote economic growth and empower the private sector, achieve efficient spending, contain expected economic risks of the after-effects of the COVID-19 pandemic, and strive to overcome the current crisis. In terms of financial and monetary growth in light of the developments of the local and global economies, fiscal and monetary policies continued to take necessary measures to ensure an adequate level of liquidity that meets the national economy’s requirements. At the end of 2021, the money supply (M3) recorded a growth of 7.4% to SR 2,308 Billion compared to the previous year. In 2021, the money supply by its narrow definition (M1) had risen annually by 5% compared to the previous year. Meanwhile, the money supply (M2) has increased by 4.9% compared to 2020.

Total credit for 2021 by commercial banks for economic activities in the private sector increased by 16% compared to last year.

The Kingdom’s revenues in 2021 rose by 19%

As part of strengthening the role of the financial market in the Saudi economy, 2021 saw the Saudi stock market join the FTSE Russell Government Bond Emerging Markets and the iBoxx Government Bond Index. In addition, the Capital Market Authority disclosed the strategic plan for 2021-2023, which aims – alongside the financial sector development program – to give rise to an advanced financial market, by deepening the financial market and enhancing its role in attracting capital, developing the market for sukuk and debt instruments, and promoting the role of funds in financing the local economy, in addition to growing asset management and institutional investment, raising market attractiveness, diversifying investment products, and improving trading mechanisms.

In the area of structural and organizational reforms, which aim to strengthen the structure of the economy, the year 2021 witnessed many reforms. The Ministry of Housing was merged into the Ministry of Municipal and Rural Affairs and renamed the Ministry of Municipal and Rural Affairs and Housing, the Ministry of Transport was also renamed the Ministry of Transport and Logistic Services, the General Authority of Zakat and Income and the General Authority of Customs were merged into a single body named the Zakat, Tax, and Customs Authority, and the Public Pension Agency was merged into the General Organization for Social Insurance. Similarly, the national program to support project management, operation, and maintenance in public entities was subsumed into the Center of Spending Efficiency

(CSE), and the CSE was transformed into the Expenditure and Project Efficiency Authority. The National Center for Digital Certification and the e-Government Program (Yesser) were both canceled and replaced by the Digital Government Authority, whose regulation was approved. The Yanbu, Umlaj, Al-Wajh, and Duba Development Authority was established and the National Center for Disease Prevention and Control was transformed into the Public Health Authority.

Several specialized laws have also been approved, including approving the establishment of SME Bank, the Private Sector Participation Law, the Cultural Development Fund Law, the Waste Management Law, the National Radioactive Waste Management Policy, the establishment of the National Center for Non-Profit Sector, and the National Rules of Origin. Furthermore, the transformation of the King Faisal Specialist Hospital and Research Center into an independent non-profit institution has been approved. In addition, the Capacity Building Development Program was launched, which is a program aimed to support achieving Saudi Vision 2030. In 2021, several development projects were also announced, including the Shareek (Partner) Program, the National Investment Strategy, the Line and Coral Bloom projects, and the Soudah Development Company. The National Transport Strategy, the Assir Region Development Strategy, the Historic Jeddah Revival project, the Rig project, and the announcement of Green Saudi Initiative and the Green Middle East Initiative have been launched.