With both oil and non-oil economic activity in Saudi Arabia growing as the Kingdom’s economy bounces back from the pandemic, Riyadh-based Jadwa Investment said in a research note that it will upgrade Saudi Arabia’s 2021 forecasted GDP.
Saudi Arabia’s GDP has shown strong non-oil sector growth in H1 2021.
“Both actual and flash estimates of the Kingdom’s GDP published by the General Authority for Statistics (GaStat) have shown strong non-oil sector growth in H1 2021. This combined with our expectation of continued growth in H2, has led us to upgrade our full year 2021 GDP forecast,” Jadwa said.
Non-oil GDP growth for Saudi Arabia increasingly is playing a positive role for the Kingdom’s economy, according to Jadwa, a good sign for authorities as they continue with efforts to diversify the economy away from oil.
“We now expect overall GDP growth for Saudi Arabia to hit 1.8 percent (vs. 1.3 percent previously). Within this, we see oil GDP being marginally down year-on-year, at -0.7 percent (as previously), but with non-oil growth rising by 3.5 percent, primarily because of higher non-oil private sector growth of 4.4 percent (vs. 3.1 percent previously),” Jadwa Investment said.
Jadwa also forecasted positive news for the Kingdom’s fiscal situation, seeing the activity and increase in oil price as producing a much lower deficit this year than predicted by the Ministry of Finance.
“On the fiscal side, an upward revision in our full year Brent oil forecast to $67 per barrel (pb) means we now expect government oil revenue to total SR568 billion in 2021 (vs. SR528 billion previously). Concurrently, with no changes to government expenditure, we see the fiscal deficit totaling -SR67 billion (-2.1 percent of GDP), 53 percent lower than budgeted by the Ministry of Finance (MoF).”
[Click here to read the full report from Jadwa Investment] [Arabic]
