Saudi non-oil GDP forecast to rise 3% in 2019, 2020: IIF

Saudi Arabia’s non-oil growth is expected to accelerate to 3% percent in 2019 and 2020, as private sector confidence improves and the monetary stance eases, the Institute of International Finance (IIF) said in a recent report.

The PMI rose to 57.8 in October - the highest in three years - and point of sale transactions continue to expand, the report added.

However, average consumer price index (CPI) is likely to decline by 1% in 2019 on the back of declining rents, but inflation is expected to turn positive (1.3%) in 2020 driven by higher domestic fuel prices.

Separately, banks remain adequately capitalized, liquid assets to total assets have increased and the loan-to-deposit ratio remains well below SAMA’s regulatory limit of 90%, the IIF said.

Furthermore, banks’ profitability in the Kingdom remains “less sensitive to changes in policy rates”, and non-performing loans (NPLs) are low at around 2% of total loans, it noted.