Mubasher: The growth of the non-oil sector in Saudi Arabia is expected to edge up at 0.8% in 2017 and 1.1% in 2018, backed by higher consumer activity and government spending, according to a recent report issued by the National Bank of Kuwait (NBK).
The kingdom's gross domestic product (GDP) is projected to decline by 0.6% in 2017, dragged by crude oil output cuts under the terms of the agreement made by the Organization of Petroleum Exporting Countries (OPEC).
NBK also expects Saudi Arabia’s GDP to rebound by 0.9% in 2018 as both oil and non-oil growth is likely to recover.
Saudi Arabia’s fiscal deficit should be split to 8.0% of GDP in 2017 on higher oil prices, with new non-oil revenue measures and only modest spending increases.
“The goal of balancing the budget by 2020 is not unrealistic,” the report stated.
NBK noted that the kingdom’s deficit is projected to continue to be financed through debt issuance and reserve drawdowns, leading to a peak debt/GDP ratio of 24% in 2018.
Meanwhile, bond sales and deposit growth have improved the liquidity of the banking sector in Saudi Arabia.
At the stock market’s level, the index has been up 33% over the past year on improved investor sentiment due to higher oil prices, in addition to recent economic and regulatory reforms.
