Riyadh – Mubasher: Saudi Arabia’s economic growth is expected to reach 1.6% in 2020, and 2.2% in 2021, as oil production cuts are reversed and ongoing diversification reforms yield dividends, according to the World Bank’s (WB) recent report.
With US shale production continuing to increase in the first half of 2019, Saudi Arabia’s oil production cuts were deeper than pledged.
The kingdom’s real gross domestic product (GDP) growth is expected to hit 0.8% during 2019, as the drag from oil production cuts is compounded by the worsening global outlook since the early summer.
“The attacks on Saudi oil facilities in September led to a significant supply disruption which is also expected to impact 2019 growth,” the report highlighted.
The bank noted that these adverse outcomes would be partially offset by the boost to non-oil private sector activity from rising government spending.
“Inflation should remain subdued as growth remains below potential,” the WB stated.
The report point pointed out that public finances will remain in deficit, albeit narrowing, given the outlook for low energy prices over the next two years.
“Realising the balanced-budget target by 2023 (as in the Fiscal Balance Program) is contingent on sustained fiscal consolidation and higher oil prices,” the bank said.
The current account surplus is projected to widen with a shrinking trade surplus from lower oil exports receipts and higher private demand and Vision 2030-related infrastructure imports.
It is worth noting that Saudi Arabia will chair the G-20 in 2020; this increased global profile is likely to stimulate progress on structural reforms.
