Saudi Arabia’s economy is expected to grow 8.3 percent this year, according to Egyptian investment bank Beltone Financial, which revised its earlier estimate of 4.9 percent.
The upward revision comes on the back of “higher oil production and is further supported by an ongoing positive trend in the non-oil sector recovering from the pandemic woes,” the bank said in a new report on Monday.
According to the Saudi General Bureau of Statistics, 1Q22 has already seen growth of 9.9%.
“We note that non-oil GDP grew 4.9% in 2021, slightly higher than our estimated 4.4% growth. Total GDP grew 3.2% in 2021, ahead of our estimate of 2.1%, reflecting flat development in the oil sector compared to our expectation of a 1.2% contraction,” Beltone said.
The report also highlighted the 20 billion Saudi riyal stimulus package, the return of international pilgrimage and higher employment among Saudis as key drivers for an upward revision in private spending growth.
The broker expects headline inflation to be moderated to 2.5% this year, below the global average. “We expect the Federal Reserve to hike interest rates by 200 basis points in 2H22e, while Saudi Arabia will only emulate 100 basis points in more favorable monetary conditions.”
The Saudi government is expected to post a budget surplus of 7.6% of GDP in FY22e as revenue increases by SAR364 billion. Meanwhile, excess oil revenues will be deposited into the government checking account by the end of this year, to avoid being used in the form of increased government spending, according to the Treasury Department.
“We expect the current account to register a 17.5%-of-GDP surplus as the trade balance almost doubles despite a contraction in net investment income and larger remittance outflows.”
(Writing by Brinda Darasha; Editing by Daniel Luiz)
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