The Saudi Arabian economy will grow by an estimated 1.5 percent in 2018, up from a contraction in 2017 of -0.7 percent, according to a new report from Riyadh-based economic analysts at Jadwa Investment.
“The oil sector will see the largest improvement in the year ahead, rising to 1.5 percent in 2018, compared to a decline of 3 percent in 2017. The recovery in oil sector will be mainly driven by the start-up of the Jizan refinery during the year,” Jadwa writes.
Non-oil growth has stabilized and, in the near term, will continue to see mild improvements as growth enhancing government expenditure lifts the economy.
“Moreover, record budgeted expenditure in 2018, the Citizen’s Account and a private sector stimulus program are all designed to cushion the economy from potentially disruptive effects of measures such as; VAT, rises in dependency fees, expat levies and energy price reform,” Jadwa writes. “Overall, the Kingdom’s still holds significant fiscal buffers, through sizable FX reserves, and maintains a strong sovereign credit rating, all of which affords the persistence of modest budget deficits in the near to medium term.”