New research says Saudi non-oil economic growth to rise to 2.3% this year
Saudi Arabia will see a continued improvement in the health and direction of its economy in 2019, according to new research from Jadwa Investment.
Its report said that during 2019, it expects to see a consolidation of efforts in striving towards the goals of the Vision 2030, as well as the targets set under the National Transformation Program.
This effort will be aided by the largest ever budgeted expenditure, for the second successive year, of SR1.1 trillion, it noted.
Jadwa said that while economic reform is still currently underway, latest full year GDP data for 2018 shows that the economy was able to absorb most of the disruptive effects of necessary economic reform enacted last year.
"Looking ahead, as comparably limited major reform is scheduled to take place during 2019, this should clear the way for a pick-up in momentum for the Saudi economy," the report said.
Although the oil sector’s output will be partially trimmed by Saudi Arabia’s commitment to the OPEC and partners (OPEC+) agreement, Jadwa noted that it does see the non-oil sector exhibiting marginally higher year-on-year growth.
According to its forecasts, Saudi Arabia’s economy will grow by 2 percent in 2019, compared to 2.2 percent in 2018, with the decline in yearly growth entirely due to lower oil sector GDP as the kingdom complies with the OPEC+ production agreement.
That said, Jadwa still sees oil sector growth being boosted by a rise in gas output and the opening of the Jazan refinery.
Jadwa's research also said that the non-oil sector will continue to benefit from an expansionary fiscal policy, which not only includes a 20 percent yearly rise in capital expenditure, but also a number of targeted support measures.
Specifically, payments under the Citizen’s Account will be continued, annual allowances for public sector workers will be reinstated and there will be a rolling over of inflation allowances, as per a Royal decree. In addition, a recently approved scheme will allocate SR11.5 billion to help eligible companies with expat fees.
All these measures combined will contribute to raising non-oil growth to 2.3 percent, up from 2.1 percent in 2018, Jadwa added.