Saudi Arabia’s economic outlook will be positive this year on the back of strong non-oil activities, including higher consumer spending, according to a new analysis.

The kingdom’s gross domestic product (GDP) is on track to expand by 4.4% in 2024 despite lower oil revenues, as the non-oil economy continues to get a boost from the Saudi Vision 2030 programmes, AlJazira Capital said in its report.

“Increase in consumer spending, low unemployment levels and expansion in non-oil private sector activity point towards favourable economic conditions for the kingdom,” the Saudi investment firm’s report said.

“[The GDP will expand] on the back of growth in the private sector amid implementation of programmes under Saudi Vision 2030. Weak oil revenues would be offset by growth in non-oil revenues.”

Saudi’s forecast GDP for the full year is slightly lower than China’s (4.6%), but higher than emerging economies (4%), Euro area (1.2%) and the United States (1.5%).

Revenues from oil for the full year 2023 are forecast to fall to SAR752 billion ($200.5 billion) from a year earlier due to output cuts, but non-oil revenues are expected to climb to SAR441 billion from SAR411 billion over the same period.

The government’s expansionary spending over the medium term through the Public Investment Fund (PIF) will also support non-oil activity GDP and mitigate the decline in oil income.

AlJazira also noted that, compared to other economies, Saudi Arabia’s debt levels are moderate and remain comfortable at 25.9% of the expected GDP.

“However, significant funding requirements to meet Vision 2030 targets would result in the budget deficit for FY 23-24 need to be covered with most part by debt and we believe, a comfortable debt profile would help support the government’s spending plans.”

(Writing by Cleofe Maceda; editing by Seban Scaria) seban.scaria@lseg.com