Saudi economy to grow by 7.3% next year: Capital Economics

Saudi inflation is also projected to edge a little higher towards 1 percent by the end of this year and the first quarter of 2022

  
Image used for illustrative purpose. The view of Riyadh horizon during a cloudy day.

Image used for illustrative purpose. The view of Riyadh horizon during a cloudy day.

Getty Images

CAIRO: Economic research firm Capital Economics expects the Saudi economy to grow by 2.5 percent this year and by an impressive 7.3 percent in 2022.

When compared to the firm’s pre-pandemic estimates, the country’s GDP would be about 3 percent higher by the end of 2023.

William Jackson, Chief Emerging Market Economist at CE, added: "This would make the Saudi economy one of the few in the world where GDP will be above its pre-pandemic trend over the forecast period.”

The company predicts that higher oil output, along with a less contractionary fiscal policy, would drive the economy’s recovery next year.

Saudi inflation is also projected to edge a little higher towards 1 percent by the end of this year and the first quarter of 2022.

Following this period, the rise in consumer prices is expected to be in the 1-1.5 percent range. However, it could fall to a lower level in case the VAT rate dropped, the company pointed out.

The new report also offered an outlook for the whole region. Gulf countries’ economic recovery as a whole is expected to gain momentum due to their strong vaccination rates and higher oil production.

In the UAE, rising oil output and the World Expo are expected to fuel the economy’s growth.

Despite an expansion in economic activity driven by rising gas output, Qatar’s rebound could prove to be weaker than other GCC countries due to risks in the non-oil sector.

Meanwhile, Oman and Bahrain could face setbacks in their recoveries as they grapple with contractionary fiscal policies and mounting public debt.

In addition, Egypt’s recovery could gain pace in the next quarters as the economy re-opens. However, a weak vaccination campaign and a tight fiscal policy might hamper this trend.

The firm expects the country’s economy to grow by 4.8 percent and 5.8 percent in 2020 and 2021 respectively.

Copyright: Arab News © 2021 All rights reserved. Provided by SyndiGate Media Inc. (Syndigate.info).

Disclaimer: The content of this article is syndicated or provided to this website from an external third party provider. We are not responsible for, and do not control, such external websites, entities, applications or media publishers. The body of the text is provided on an “as is” and “as available” basis and has not been edited in any way. Neither we nor our affiliates guarantee the accuracy of or endorse the views or opinions expressed in this article. Read our full disclaimer policy here.

More From GCC