A recent report on the Saudi economy by Riyadh-based Jadwa Investment finds that overall GDP growth will be 0.1 percent in 2017 (compared to 1.4 percent in 2016) due to a sharp decline in oil sector GDP, resulting from the Kingdom’s OPEC commitments to cut output.
The projected figure is a revision from earlier forecasts based on news of the OPEC cuts, which were recently extended by another nine months to March 2018, that will result in oil production having negative effects on GDP. Jadwa also revised its 2017 budget deficit forecast accordingly, to SR182 billion ($163.22 billion), or 6.9 percent of GDP.
But while oil figures weigh on the overall economic picture, positives can be found non-oil GDP figures, Jadwa says.
“More positively, we forecast non-oil GDP to reach 1 percent during the same period (compared to 0.2 percent in 2016). Non-oil GDP will be supported by yet to be realized government capital spending. The recent Q1 2017 budgetary data showed that only 11 percent of our estimated capital expenditure, at SR260 billion for 2017, had been utilized,” according to Jadwa Investment.