Question

Why is it important to understand the concepts of inflation, present value, and future value of money as Saudi Arabia moves towards Saudi Vision 2030? What are some of the important terms and concepts that managers must understand in making decisions in today’s global environment? How will these factors affect Saudi Vision 2030? please new answer don't copy the previous answers here. add one reference.

Answer 1

It is important to understand the concepts of Inflation, Present value and future value of money irrespective of Saudi Arabia moving towards its Vision of 2030. As, positive Inflation reduces the value of money every year and thus the present value of money will be valued even lesser the next year, provided the inflation is positive. So, it is always advisable to invest the funds into the instruments which gives better annual return than tha rate of Inflation, thus giving a positive outflow. In short, if the Inflation is at 10% then Price of Oil barrel trading at $40 per barrel will be valued $44 per barrel after one year, keeping rest of things in place. So, it is necessary to know the concept of Inflation, PV and FV of money.

Some of the Important term and concepts required for decision making by Saudi Arabia in today's global environment are as mentioned:

a. Reduction of the dependency of the economy on Oil Prices - It contributes to almost 30% of GDP of Saudi Arabia. And, a little hiccups in the prices affects the economy in a big way. And, Moreover, it is impacting the Global resources depletion and Global warming.

b. Waiving of Income tax to individuals - It impacts the goverment sectors in a big way as it reduces the liquidity held with goverment or central bank which could be used to increase the employment in reduce the layoffs.

c. Political stability and healthy international relations - This is important to give boost up to the FDI from other country.

d. Although travel and tourism have taken a non-measurable hit, it is important to strengthen the in-house supply chain and logistics and give a healthy start up environment to flourish into these unpredictable times.

Current Scnerio, One has to focus on building its own infrastructure and facility so that in-house consumption is increased and demand gets back on track.

Reference - https://www.middleeasteye.net/

Hope this solves the query.