SAUDI ARABIA: The International Monetary Fund warns Saudi Arabia to reduce its dependence on oil exports and diversify its economy
Record ID:
189274
SAUDI ARABIA: The International Monetary Fund warns Saudi Arabia to reduce its dependence on oil exports and diversify its economy
- Title: SAUDI ARABIA: The International Monetary Fund warns Saudi Arabia to reduce its dependence on oil exports and diversify its economy
- Date: 4th December 2013
- Summary: RIYADH, SAUDI ARABIA (DECEMBER 3,2013) (REUTERS ) CONFERENCE IN PROGRESS AUDIENCE SEATED (SOUNDBITE) (English) DEPUTY MANAGING DIRECTOR OF IMF, MIN ZHU, SAYING: "The global credit expansionary cycle is ending. What does that mean for the region? It means the very strong external demand will become weak for the region. That means the region needs to look at more growth drive from inside the economy rather than from external demand." REPORTERS LISTENING CONFERENCE IN PROGRESS (SOUNDBITE) (English) DEPUTY MANAGING DIRECTOR OF IMF, MIN ZHU, SAYING: "Our studies show if China reduces one percent GDP of investment, one percent GDP of investment, it will have a negative impact on GDP growth 0.35 on Saudi Arabia." AUDIENCE APPLAUDING SAUDI FINANCE MINISTER APPROACHING PODIUM SAUDI FINANCE MINISTER WELCOMING AUDIENCE (SOUNDBITE) (Arabic) SAUDI FINANCE MINSTER, IBRAHIM ALASSAF, SAYING: "Government policies have achieved an increase in the participation of the private sector in the national economy. The value of its participation has risen to about 700 billion riyals in 2012, which represents 58 percent of GDP." AUDIENCE LISTENING (SOUNDBITE) (Arabic) SAUDI FINANCE MINSTER, IBRAHIM ALASSAF, SAYING: "The increase in the [private sector] contribution to employing Saudi nationals exceeded 250,000 Saudis in 2012 - 34 percent more than in 2011, and this sector exceeds one million national workers." BANNER READING (English and Arabic): 'MIDDLE EAST ECONOMY AND THE ROLE OF THE PRIVATE SECTOR CONFERENCE' (SOUNDBITE) (Arabic) SAUDI FINANCE MINSTER, IBRAHIM ALASSAF, SAYING : "What our region has in terms of resources and possibilities makes us optimistic about the future of the private sector. But it still needs to accelerate structural reforms aimed at improving the business environment and boosting partnerships and cooperation between the public and private sectors to achieve comprehensive growth and sustainable development." EXTERIOR OF COUNCIL OF SAUDI CHAMBERS HEADQUARTERS
- Embargoed: 19th December 2013 12:00
- Keywords:
- Location: Saudi Arabia
- Country: Saudi Arabia
- Topics: Economy
- Reuters ID: LVA3SBOAE2EF8QZKCR4HML4QLXMC
- Story Text: Saudi Arabia needs to strengthen its private sector to satisfy a surge in job demand from its young population and reduce its dependence on main oil export markets, a senior International Monetary Fund official warned on Tuesday (December 3).
The world's top oil exporter has long seen entrenched unemployment among young people as its biggest challenge in coming decades, but has struggled to turn private sector growth into jobs for Saudis.
The fund said last month that Gulf Arab states would need to create 600,000 private sector jobs by 2018 just to keep the percentage of nationals working for private companies flat. This would still only absorb one third to one half of expected labour market entrants, it added.
At an event in Riyadh, deputy deputy managing director of the IMF, Min Zhu, said the Saudi economy also faced a challenge in reducing its dependence on main energy markets, such as China.
"The global credit expansionary cycle is ending. What does that mean for the region? It means the very strong external demand will become weak for the region. That means the region needs to look at more growth drive from inside the economy rather than from external demand," he said.
The kingdom is the world's top oil exporter and China is its main crude market. It is also a big customer for Saudi petrochemicals, which are its main non-oil industrial export.
Zhu said any reduction in Chinese government investment in the economy would have a more direct impact on Saudi growth rates.
"Our studies show if China reduces one percent GDP of investment, one percent GDP of investment, it will have a negative impact on GDP growth 0.35 on Saudi Arabia."
The kingdom's private sector grew to about 700 billion riyals in 2011, Finance Minister Ibrahim Alassaf said at the same event, which he said represented 58 percent of gross domestic product.
Alassaf said this had led private companies to employ an extra 250,000 Saudi employees in 2012 over 2011, meaning the total participation of Saudi nationals in the private sector workforce was now more than one million.
But he acknowledged that private sector growth across the Middle East required "an acceleration of structural reforms aimed at improving the business environment".
The Saudi government recently launched a crackdown on foreign workers in the kingdom in a bid to encourage more Saudis to take jobs traditionally taken by migrants.
Nobody expects Saudis to work as manual labourers on construction sites or as domestic servants, but in recent years a growing number of young Saudis have taken jobs, such as shop assistants, that they may have disdained in the past.
All previous efforts to raise Saudi private-sector employment through market-friendly reforms and more punitive measures such as "Saudisation" hiring quotas have stumbled on the ready availability of cheap foreign labour.
But this time, by cracking down on visa irregularities that allowed companies to cheat the system, and by spending billions of dollars on vocational training for young Saudis, the authorities hope their policies will be more effective. - Copyright Holder: REUTERS
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