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.

Related:
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!

Enter the words above: Enter the numbers you hear:

All comments are subject to approval before appearing

Further reading

Features & Analysis
Saudi Arabia adds to oil power with new refineries

Saudi Arabia adds to oil power with new refineries

Two state-of-the-art plants set to redefine Gulf kingdom's role...

Gulf economies edge towards reform as oil price slides

Gulf economies edge towards reform as oil price slides

Countries mull moves to cut spending on lavish cradle-to-grave...

The curious case of David Haigh

The curious case of David Haigh

The story of how the former Leeds United boss went from football...

1
Most Discussed
  • 15
    Why Dubai should consider removing the rent cap

    Yes please remove the rent cap, let the prices get even more jacked up. In the end it will burst, and no one will benefit. Neither tenants nor landlords... more

    Sunday, 23 November 2014 7:01 PM - david-bp
  • 8
    Expats need to count the hidden costs of living in UAE – report

    Everybody is indeed taxed via DEWA bills, but there is also taxation on pork, alcohol, dining out at restaurants as in municipality tax, car tax (registration... more

    Sunday, 23 November 2014 4:03 PM - Red Snappa
  • 2
    Is this the end of F1?

    Nicely written!
    I think its time for private and VIP personalities in the Middle East to step in and boost this sport up. But of course, the F1 Management... more

    Sunday, 23 November 2014 2:47 PM - MOSA