Saudi economy on path to recovery amid gradual oil price rise

The oil sector’s GDP contracted by 8.5% y-o-y and the non-oil sector by 0.8% y-o-y

Buildings are seen in Riyadh, Saudi Arabia February 16, 2021.

Buildings are seen in Riyadh, Saudi Arabia February 16, 2021.

REUTERS/Ahmed Yosri

Saudi Arabia’s GDP fell 3.9 per cent y-o-y in the fourth quarter of 2020 as compared to 4.6 per cent y-o-y in Q3, indicating a recovery of the kingdom from the pandemic, according to Al Rajhi Capital, a leading provider of financial services in the kingdom.
Further, it is expected to do better this year, as oil production improved gradually from 7.53 million bpd in June last year to 8.15 mbpd in February 2021 amid a recovery in oil prices, it stated.
The oil sector’s GDP contracted by 8.5% y-o-y and the non-oil sector by 0.8% y-o-y. On the other side, non-oil GDP should also recover as the hospitality, retail, and entertainment sectors are mostly back to normal operations, it added.
Further, S&P Global Ratings affirmed Saudi Arabia’s sovereign credit ratings at ‘A-/A-2’ with a stable outlook. The credit rating agency said that the Saudi economy will likely to return to positive growth in 2021 after the contraction seen in 2020.
Saudi Arabia has launched the new ‘Shareek’ programme to boost the role of the private sector in diversifying the economy. Under the new programme, private sector companies will be helped to invest SR5 trillion ($1.33 trillion) until 2030.
The programme aims to consolidate the kingdom’s reputation as a sustainable, ambitious, and thriving global economic powerhouse, said the report by Al Rajhi Capital.
With this new announcement, the total funds and corporates investments that will be pumped into the national economy would reach SR12 trillion by 2030. The first deal between large companies and the new program are expected to be signed in June.
According to Al Rajhi Capital, the Saudi Central Bank’s February statistics looked healthy. The credit to the private sector increased 15.6% y-o-y for the month, while bank claims on the public sector advanced 11.5% y-o-y and the deposits grew by 10.2% y-o-y.
This helped money supply M3 to expand 9.8% y-o-y in February 2021, supported by M1 (+13.1% y-o-y) and M2 (+8.8%), it stated.
The spending in the local market, especially in the retail, food & beverages, and health segments, continues to support the economy, it added.-TradeArabia News Service

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