Saudi Arabia's economy is set to grow at 8.3 percent this year, according to Egypt based investment bank Beltone Financial, revising its earlier estimate of 4.9%.

The upward revision comes on the back of "higher oil production and further supported by a maintained positive trend in the non-oil sector, rebounding from the pandemic woes," the bank said in a new report on Monday. 

According to the Saudi General Authority for Statistics, 1Q22 already saw a 9.9% growth.

"We note that non-oil GDP registered a growth of 4.9% in 2021, slightly higher than our estimated 4.4% growth. Total GDP expanded 3.2% in 2021, above our estimate of 2.1%, due to a flat performance of the oil sector vs our expectations of a 1.2% contraction," Beltone said. 

The report also highlighted the 20 billion Saudi riyals stimulus package, return of international pilgrimage, and higher employment among Saudis as key drivers to an upward revision of private spending growth.

The brokerage expects headline inflation to be tamed at 2.5% this year, below global average. "We expect the Federal Reserve to hike interest rates by 200bps in 2H22e, with Saudi Arabia to mimic only 100bps on more favourable monetary conditions."

The Saudi government should generate a budget surplus of 7.6% of GDP in FY22e, as revenue increases by SAR 364 billion. Meanwhile, according to finance ministry, excess revenue from oil will be transferred to the government’s current account until the end of this year, not to be deployed in the form of higher government expenditure. 

"We expect current account to register a surplus of 17.5% of GDP, as trade balance almost doubles despite a crunch in net investment income and larger outflows of expat remittances."

(Writing by Brinda Darasha; editing by Daniel Luiz )