A recently released macroeconomic update by Jadwa Investment finds the fundamentals of the Saudi economy remain unaltered and the bank “expects solid growth in the next few years” by 2.2 percent in 2018 (compared to -0.9 percent in 2017), with an improvement in the oil sector lifting oil GDP to 3.2 percent in 2018.
Looking out into 2019, the Riyadh-based Jadwa says it is expecting “slightly slower growth in GDP, at 2 percent, due to a slower yearly rise in the oil sector, at 2.3 percent. On the non-oil side, we expect economic growth to continue improving on the back of another record level in budgeted government expenditure of SR1.1 trillion, as detailed in the 2019 Preliminary Budget Report.”
For the government, revenue is forecasted to pick up next year, according to Jadwa’s estimates. Jadwa said that it is forecasting that the combination of a higher Saudi export price with crude oil production at around 10.3 mbpd is expected to raise government oil revenue to SR599 billion in 2018, compared to our previously forecasted SR576 billion.
In 2019, a marginally higher Saudi export price as well as higher levels of Saudi oil and refined product exports will push up government oil revenue 5 percent year-on-year to SR629 billion.
Government spending is also set to help the non-oil private sector to grow. With another record level of budgeted government expenditure of $293.3 billion, as indicated in the preliminary statement of the state budget for 2019, GDP of the non-oil sector is expected to grow 1.8 percent.