The Saudi economy is “on-track to record a very strong level of growth this year, and we expect this to continue into next year…[with] the Kingdom’s economy growing by 7 percent year-on-year in 2022 as a result of sizably higher oil sector growth and robust levels of non-oil growth,” Jadwa Investment said in the Riyadh-based bank’s latest research note on the Saudi economy.
Jadwa Investment said that oil is still in the driver’s seat for the Saudi economy’s near-term fortunes. ‘With respect to the oil sector, we see growth driven by higher Saudi crude oil production, in-line with yearly rises in global oil demand. We note that circa 40 percent of OPEC+’s spare capacity resides with Saudi Arabia, and thus any uplift in demand will likely be met with proportionally higher oil supply from the Kingdom,” Jadwa said.
The Saudi non-oil economy has performed exceptionally well in the year-to-Q3, with recent flash estimates of the Kingdom’s GDP
published by the General Authority for Statistics (GaStat) showing
‘non-oil activities’ rising by 6.2 percent year-on-year in Q3 2021, Jadwa Investment said.
The year ahead will mark “a critical phase in the Kingdom’s efforts towards diversifying its non-oil economic base,” according to Jadwa Investment, which will be guided by a set of recently unveiled five year commitments (till 2025) under various Vision Realization Programs (VRPs).
“At the same time, the Saudi economy will be supported by another sizable outlay in government expenditure, which, despite declining on a yearly basis in 2022, is still set to total just under SR1 trillion. Additionally, both the Public Investment Fund (PIF) and the National Development Fund (NDF) will be the engines of capital deployment and economic development in the Kingdom, as detailed in the recently unveiled National Investment Strategy (NIS),” Jadwa said.
The main risk factor for the above projections is the global pandemic.
“As it stands, it is too early to gauge the full impact of the variant on the Saudi economy, especially so without knowing to what extent, if any, the variant poses a threat to the current crop of Covid-19 vaccines’ effectiveness,” Jadwa said.
[Click here to read the full report from Jadwa Investment] [Arabic]
