Saudi 2021 GDP growth revised higher as non-oil sector improves

RIYADH: Saudi Arabia’s economy will expand faster than previously forecast this year, as non-oil industries continue their recovery from the pandemic, Arab News quoted Jadwa Investment, as saying.

GDP will grow 1.8 per cent in 2021, a revision from a previous estimate of 1.3 per cent, Jadwa said in a research report.

The non-oil growth will come in at 3.5 per cent, driven by the non-oil private sector, which Jadwa sees rising 4.4 per cent, compared to a previous estimate of 3.1 per cent.

“Whilst the rebound is no surprise, some sectors have performed better than anticipated,” it said. The investment bank attributed the improvement in the non-oil sector to activities in real estate, manufacturing, wholesale and retail, and restaurants and hotels.

Despite the overall growth in GDP, Jadwa expects oil sector GDP “being marginally down year-on-year, at -0.7 per cent,” unchanged from its previous outlook.

Oil prices are expected to increase this year with Brent averaging $67 per barrel, leading to higher government oil revenue of SR568 billion in 2021, revised from SR528 billion previously, it said.

“With no changes to government expenditure, we see the fiscal deficit totalling -SR67 billion (-2.1 per cent of GDP), 53 per cent lower than budgeted by the Ministry of Finance,” it said.