IMF concludes the Kingdom's economic performance
IMF mission is completed after a two-week visit to assess the development of the country's macro-economy : economic growth is projected to remain strong around 7 percent for 2016 and 2017 supported by exports of clothing, real estate and construction activity and falling prices as well.
The country's trade deficit is expected to decline from 10.7 percent in 2015 to 9.7 percent By the end of this year due to strong exports of clothing and will be less dependent on imports of electricity after the completion of several major hydroelectric projects Meanwhile, inflation is expected to rise to 3.2 percent but rising food prices.
But the IMF forecast economic growth will slow to around 6.25 percent in 2021 due to reduced beat in foreign direct investment (FDI) challenges in diversifying exports and decrease of the credit cycle.
While the outlook is positive widely mission has confirmed a number of key risks.
The IMF concluded that: reducing the main risk to the outlook is gathered in real estate, which threatens to undermine economic and financial stability.
According to Markus Rodlauer, deputy director of the IMF's Asia-Pacific private sector credit growth has averaged about 30 percent annually 3 years ago, while the annual rate of over 50 percent in real estate and construction sector. During this time of credit compared to the gross domestic product has doubled to more than 60 percent.
He said that while a certain level of credit growth has improved high speed is increasing unsustainable and pose the main threat to the long-term macroeconomic stability.
He said: 'We believe that the loans in the real estate sector is on the dangerous path that needs to drop down .
He said: 'The longer [to do this] more people will be affected when it stopped .
Rodlauer praised the country's Central Bank in the implementation of preventive measures aimed at ensuring reserves when there is a drop any down recently by increasing reserve requirements for financial institutions. But he said the IMF thinks that more measures are needed and they should put out a gradual to reduce the economic crisis.
He said: 'direction to achieve the gradual decline of the credit cycle.
The mission of the IMF also emphasized the external risks to the macroeconomic stability of the country. They include the effects of the sharp fall in the Chinese economy rising dollar US economic growth falters in Europe after the referendum result from the EU's British and tightening financial conditions even tougher expectations.
Preliminary findings and recommendations of the mission will be presented to the IMF Executive Board for discussion and decision.
