Home Gulf News, Saudi Arabia Saudi economy forecast to grow by 2.2% in 2018

Saudi economy forecast to grow by 2.2% in 2018

Gulf News, Saudi Arabia 2018/11/10 at 7:10 PM
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Saudi Arabia‘s economy is expected to grow by 2.2 percent this year compared to a 0.9 percent contraction in 2017.

Saudi Arabia’s economy is expected to grow by 2.2 percent this year compared to a 0.9 percent contraction in 2017, according to a new research note from Jadwa Investment.

Jadwa said the fundamentals of the Saudi economy remain stable, with an improvement in the oil sector lifting oil GDP to 3.2 percent in 2018.



Analysts said in 2019, slightly slower growth in GDP, at 2 percent, is expected due to a slower yearly rise in the oil sector, at 2.3 percent.

On the non-oil side, Jadwa said it expects economic growth to continue improving on the back of another record level in budgeted government expenditure of SR1.1 trillion, as detailed in the 2019 preliminary budget report.

“We forecast that the combination of a higher Saudi export price with crude oil production at around 10.3 mbpd is expected to raise government oil revenue to SR599 billion in 2018, compared to our previously forecasted SR576 billion,” the research note said.

It added:

“In 2019, a marginally higher Saudi export price as well as higher levels of Saudi oil and refined product exports will push up government oil revenue 5 percent year-on-year to SR629 billion.”

According to the recent quarterly budget statements, taxes on goods and services have been the fastest growing item in non-oil revenue so far this year and it is expected to be one of the main contributors in 2019.

Jadwa noted that overall the Saudi economy has shown “solid growth” with the recent Q2 GDP data showing the economy expanded by 1.6 percent, year-on-year, with non-oil GDP rising by 2.4 percent.

Despite this, Jadwa said it still see risks remaining in the year ahead. Apart from the most apparent risk of lower than forecasted oil prices in 2019, it also sees the possibility of a decline in consumption in the kingdom as a key risk.

Last week, Saudi Arabia‘s finance ministry said the country’s budget deficit dropped sharply in the first nine months of 2018 on the back of a surge in oil and other revenues.

The OPEC kingpin, which has introduced economic reforms aimed at reducing its dependence on oil, has benefited from a sharp rebound in energy prices on world markets.

The budget shortfall in the first three quarters of 2018 was $13.1 billion, a 60-percent drop from the same period last year, the ministry said.

Oil revenues rose 47 percent year-on-year to $120.6 billion while non-oil income jumped 48 percent to $56.3 billion, it said.

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Source : Arabian Business | Photo credit : Google
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