Riyadh – Mubasher: Jadwa Investment expected that Saudi economy would continue to slow down in 2017, weighted by negative growth of the oil sector, while growth in the non-oil sector should rebound but remain subdued.
Annual growth in the oil sector will turn negative in 2017, with average oil output expected to decline slightly. This comes as the Kingdom complies with the OPEC production cuts during the first half of 2017, the report said.
The investment firm said that growth will accelerate in the non-oil private sector from its 25-year lows but will remain relatively subdued, as the partial impact of fiscal balancing measures will be offset by the government’s focus on restructuring the private sector support mechanism.
A combination of a rebound in oil revenue, as a result of higher oil prices, rising non-oil revenue, and improving efficiency in expenditure will result in the fiscal deficit falling to single digits in 2017, Jadwa added.
Jadwa forecasted that economic growth would fall to 0.2% in 2017 from 1.4% in 2016. Oil sector growth is also likely to marginally decrease by 0.3% in 2017 compared to a growth of 3.4% in 2016.
Regarding non-oil private sector, it is expected that growth would rise from 0.1%, the lowest since 1990, to 1% in 2017. Non-oil mining sector is expected to grow of 7.5% percent in 2017.
The mining sector is expected to benefit from significant additions, such as the $96 billion phosphate joint venture between SABIC, Ma’aden, and Mosaic. Upon completion in 2017, the project will be one of the world’s largest integrated phosphate complexes, Jadwa reported.
