Saudi non-oil sector expected to grow by 2.4% in 2020-22: NBK

Saudi non-oil growth is estimated to have improved to 2.7% in 2019, and is expected to grow by an average of 2.4% in 2020-22, the National Bank of Kuwait (NBK) said in its latest report on Thursday.

The report further noted that after bottoming out in 2016 at 0.2%, the Kingdom’s non-oil growth improved gradually to reach 2.5% year-on-year (YoY) in H1 2019, helped in part by expansive public spending including on the government’s private sector stimulus plan.

NBK report maintained that after contracting for three consecutive years, the Saudi construction sector is expanding again on the back of several large-size projects in Riyadh. This, it said, is evidenced by a pick-up in project awards in 2019 and double-digit annual increases in cement sales since June 2019.

Another growth driver is mortgage financing, which had soared by 33% YoY as of end-September, the report added.

The report however noted that the Kingdom’s oil sector growth will likely remain subdued.

“The two main downside risks to our Saudi outlook are lower-than-forecast oil prices and a major increase in regional geopolitical risk,” the report noted.

It concluded that for the non-oil economy to expand at faster rates there needs to be a meaningful pick-up in corporate credit, FDI, or government spending in Saudi Arabia.