|12 February, 2019

Saudi economy to extend growth in 2019

Saudi Arabia's economic growth is expected to reach 2% in 2019 on the back of the kingdom's mega spending budget: Jadwa Investment

Image used for illustrative purpose. Cars drive along the New Corniche seafront development on June 23, 2018 in Jeddah, Saudi Arabia.

Image used for illustrative purpose. Cars drive along the New Corniche seafront development on June 23, 2018 in Jeddah, Saudi Arabia.

Getty Images/Sean Gallup

Riyadh –  Saudi Arabia's economic growth is expected to reach 2% in 2019 on the back of the kingdom's mega spending budget SAR 1.1 trillion, a new report has said.

The kingdom recently approved an SAR 11.5 billion scheme that would help private sector firms with expat fees.

The oil industry is also expected to see a strong improvement in the kingdom after the inauguration of the Jazan refinery along with the increase in gas production, Jadwa Investment said in its report on the Saudi economy.

"During 2019, we expect to see a consolidation of efforts in striving towards the goals of the Vision 2030 as well as the targets set under the National Transformation Programme (NTP)," Jadwa projected.

At the level of the non-oil industry, the Saudi research firm forecast large growth, driven by an improvement in the insurance and finance sectors.

Although Jadwa expects the Saudi economy to mark a 2% growth this year, compared to 2.2% in 2018, it ascribed the "mild decline" to lower gross domestic product (GDP) from the oil sector as the kingdom continues to comply with the agreement by members and non-members of the Organization of Petroleum Exporting Countries (OPEC) to reduce crude production and bolster prices.

“Aside from rises in credit to the private sector, growth in the finance, insurance, and business services will be aided through the inclusion of the Tadawul All Share Index (TASI) into both the MSCI and FTSE EM indices,” the report indicated.

Saudi Arabia's recently launched National Industrial Development and Logistic Program (NIDLP) will facilitate this projected growth and contribute to boosting the economy as it plans to attract around SAR 1.6 trillion ($427 billion) in investments in various sectors including energy, logistics services, manufacturing, and mining.

The NIDLP will "see SAR 100 billion being spent in 2019, and 2020, in order to kick-start the program," Jadwa said, noting that a combination of projects signed by the Saudi King in a recent regional trip along with progress in several giga-projects of the Public Investment Fund (PIF), "will help bring about positive growth in the construction sector for the first time in four years."

 

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