Global credit ratings agency “Moody’s“ has upgraded the Kingdom’s rating from “A1” to “Aa3,” noting the country’s efforts to diversify its economy beyond oil are bearing more fruit.
Details
In its latest country report, the agency projects stronger non-oil performance in the coming period.
Over time, this is seen as leading to a reduction in Saudi Arabia’s exposure to oil market fluctuations and a shift toward low-carbon energy.
Moody’s also adjusted its outlook to “stable” from “positive,” citing uncertainty regarding global economic conditions and oil market developments.
This means the agency expects its new credit rating to remain unchanged over the next 12 months.
So what
The new rating, indicative of a country with high quality and very low credit risk, is the fourth-highest rating from Moody’s.
It also exceeds the ratings from Fitch and Standard & Poor’s.
It is worth noting that KSA, the world’s largest oil exporter, is investing billions of dollars to implement its “Vision 2030.”
The plan aims to reduce its dependence on oil and increase spending on infrastructure.
This is in line with state targets to turbocharge sectors such as the tourism, sports, and manufacturing industries.
Saudi Arabia is also working to attract more foreign investments to ensure that its ambitious plans are realized.
Some context
Moody’s expects the non-oil private sector GDP to grow by between 4-5% in the coming years, in line with government estimates.
These estimates are considered “among the highest rates” in the Gulf Cooperation Council (GCC) region.
Now what
The General Authority for Statistics (GASTAT) revealed that non-oil exports (including re-exports) grew by nearly 17% YoY in the third quarter of this year.
Non-oil exports (excluding re-exports) also rose by 7.6%.
Meanwhile, goods exports dropped by 7.7%, affected by a 15% decline in oil exports.
Imports grew by 11.4% from July to September.
Saudi Arabia’s trade balance surplus fell by 43.4% in the third quarter compared to the same period in 2023.
