Riyadh, Saudi Arabia — The global credit rating agency S&P Global Ratings updated its credit report for Saudi Arabia, raising its long and short-term foreign and local currency sovereign credit ratings to ‘A/A-1’ with a stable outlook, the Saudi Press Agency (SPA) reported Friday.
Moody’s, a rival ratings agency, also stated that Saudi Arabia’s plans will support it despite fluctuating oil prices and a global shift to renewable energy. Moody’s also has changed the kingdom’s outlook from “positive” to “stable,” and maintained its “A1” rating.
The S&P stated in its report that this rating upgrade is a result of the kingdom’s significant reform efforts in recent years and its realization of structural improvements that contributed to supporting a sustained development of the non-oil sector, in addition to improving public finance management and maintaining a balanced public debt level.
It highlighted the kingdom’s strong real GDP growth of 8.7 percent in 2022, the highest among the G-20 economies. The agency expects the kingdom to have moderate economic growth, averaging 2.6 percent in 2023-2026 with per capita GDP averaging US$31,500 which is significantly above pre-pandemic levels.
The agency forecasts the non-oil sector to remain strong through 2026 due to service sector growth, supported by significant ongoing social reforms and female workforce participation. It also expects the continuity of fiscal surpluses through 2024 after reaching 2.5 percent of GDP in 2022.
The report indicated that inflation in the kingdom is relatively low compared to its peers. It expects that the inflation will remain under control thanks to the government’s efforts in subsidizing fuel and food, as well as the currency peg to the relatively strong US dollar.