Riyadh – Mubasher: Saudi Arabia is expected to see a broad-based recovery in 2021, despite the considerable degree of uncertainty due to the ongoing Covid-19 and its potential impact on the non-oil economy, Jadwa Investment said in a report.
Jadwa’s forecast assumes between 15-20% of the adult population being vaccinated against Covid-19 by mid-year and 70% by year-end.
Hence, a quarter-on-quarter improvement in the Saudi non-oil economy is predicted, with this recovery being more vigorous in the second half (H2) of 2021.
“Looking ahead, we see the overall GDP in 2021 rising by 2.1% year-on-year, with both the oil and non-oil sectors contributing to the rebound in growth,” the report read.
The oil sector GDP is expected to hike by 1.3%, with the lion’s share of growth being helped by the non-oil sector, which is predicted to rise by 2.7% annually.
Moreover, the higher yearly oil prices and the continued payment of dividends by Saudi Aramco will increase government oil revenue to SAR 491 billion. Meanwhile, the non-oil revenue is likely to be effectively flat on an annual basis, at around SAR 360 billion, taking total government revenue to SAR 851 billion in 2021.
Furthermore, as expenditure expected to decline by 7% yearly to SAR 990 billion, the fiscal deficit will narrow to SAR 139 billion or 4.8% of GDP.
“The main risk in the outlook comes from a more prolonged and serious outbreak of a second wave of COVID-19, possibly through a variant of the disease, or due to a slower rollout of the vaccine than currently anticipated. In this context, the recovery in the Saudi economy during the year will not be smooth,” the report concluded.
