Saudi economic growth seen at 4.2% in 2013

  • Share via facebook
  • Tweet this
  • Bookmark and Share

Saudi Arabia's economic growth is forecast to slow in 2013 compared to last year, Jadwa Investment has said in a new report.

It said it expected "another year of solid economic performance in 2013", adding that non-oil growth will be strong and inflation should slightly ease.

However, it added that lower oil production will cause total real economic growth to slow, and combined with lower oil prices, will reduce the budget and current account surpluses.

Jadwa said high government spending will remain the engine of the non-oil economy.

The report said the kingdom's economic growth was likely to slow to 4.2 percent in 2013, down from 6.8 percent in 2012.

"This decline is because oil production is forecast to drop after a 5.5 percent rise in 2012. Growth in the nonoil economy will be 5.8 percent. Government spending will be supported by greater bank lending and high consumer spending," the report added.

Jadwa said construction and transport, the main beneficiaries of government spending, should be the fastest growing sectors this year.

"Budgeted government spending for 2013 is slightly below the actual level for 2012, however we do not view this as withdrawal of the stimulus or a rethinking of the ongoing expansionary fiscal stance. Investment is budgeted at a record high and total spending will provide an important stimulus to the economy," Jadwa added.

The report said another budget surplus was expected in 2013 and the government will draw down its foreign assets, which stood at around $634.8bn at the end of November 2012, to finance its expenditure plans in the event of any shortfall in revenues.

Inflation is forecast to moderate to an annual average of 4.3 percent in 2013, supported by declining rental inflation, as more properties enter the market.

Jadwa said a significant slowdown in global growth and geopolitical tensions constituted key risks to its forecast.

Join the Discussion

Disclaimer:The view expressed here by our readers are not necessarily shared by Arabian Business, its employees, sponsors or its advertisers.

Please post responsibly. Commenter Rules

  • No comments yet, be the first!

All comments are subject to approval before appearing

Further reading

Features & Analysis
Saudi riyal peg pressure eases, but not gone

Saudi riyal peg pressure eases, but not gone

Volatile energy swings mean the currency remains vulnerable,...

Saudi reform plans flirt with social change

Saudi reform plans flirt with social change

Ruling family has preferred gradual liberalisation * Saudi reform...

Saudi Arabia’s 2030 Vision reform plan: What we know so far

Saudi Arabia’s 2030 Vision reform plan: What we know so far

Details of what Deputy Crown Prince Mohammed bin Salman and the...

Most Discussed