Riyadh-based investment bank Jadwa Investment has revised upward its growth forecast for Saudi Arabia this year, after the Kingdom’s economy showed strong expansion in both oil and non-oil activities in the first half of 2022.
“Recently published data of the Kingdom’s GDP by the General Authority for Statistics (GaStat) showed strong growth in both oil and non-oil activities in H1 2022. This combined with our expectation of continued growth in H2, has led us to upgrade our full year 2022 GDP forecast…we now expect overall GDP growth for Saudi Arabia to hit 8.7 percent (vs. 7.7 percent previously). Within this, we see oil GDP rising year-on-year, at 16.6 percent (vs. 15.5 previously), and non-oil growth rising by 4.3 percent, primarily due to higher non-oil private sector growth of 4.4 percent (vs. 3.4 percent previously),” Jadwa said.
A strong oil sector provided the bulk of the headwind behind the growth as a result of the Kingdom’s participation in an output agreement with OPEC+. Crude oil output averaged 10.5 million barrels per day (mbpd) in the year-to-August, up 20 percent over the same period last year. “Thus, latest official data from Gastat showed oil sector GDP rising by an average of 21 percent year-on-year in H1 2022,” Jadwa said.
Rises were seen in both oil revenue and non-oil revenue in Q2 2022.
But a strong non-oil sector is key for the Kingdom as the world begins its long journey toward a carbon-free future. Since the start of the year, Jadwa’s non-oil private sector composite index has been trending upwards, the bank said, with some sectors
“performing better than we have previously anticipated.”
Jadwa said it had observed higher growth in three sectors: (non-oil) Manufacturing, Wholesale and Retail Trade, Restaurants and Hotels, and Transport, Storage and Communication.
Overall, Jadwa said it expects government revenue to total SR1,338 billion ($355.66 billion) in 2022. Concurrently, with no changes to government expenditure, we see the fiscal surplus totaling SR335 billion ($89.05, or 8.7 percent of GDP) in full year 2022.
[Click here to read the full report from Jadwa Investment] [Arabic]
