Jadwa Investment has revised downward its forecast for economic growth in Saudi Arabia this year from 1.6% to 0.2% based on recent data, the Riyadh-based firm said in a recently-released report.
However, the economy going into 2020 is trending positively, Jadwa said. “Looking out into 2020, we now expect overall GDP to rise by 2.1 percent. Although oil sector GDP growth is likely to be muted, we see progress under various Vision Realization Programs (VRPs) directly contributing to growth in numerous sectors within the non-oil economy. Moreover, we expect additional uplift as a result of Saudi Arabia hosting the G20 summit next year,” Jadwa notes.
“As per the recently released preliminary budget report, lower than budgeted government revenue and expenditure will result in the fiscal deficit hitting SR131 billion (4.3 percent of GDP) in 2019. However, a larger downward revision in revenue than expenditure in 2020 will push the fiscal deficit to SR187 billion (5.9 percent of GDP) next year.
Jadwa said that it has not changed its view over the main risks to the Kingdom’s immediate economic outlook, “which remain external. Specifically, global economic developments, in particular with regards to the US and Chinese trade dispute, as well as regional geopolitical tensions, stand out as the main risks to our forecast.”