Jadwa raises forecast on Saudi economic growth to 2.2%

Riyadh-based Jadwa Investment on Wednesday revised upwards its forecast on Saudi Arabia’s 2018 economic growth to 2.2 percent, from its previous estimate of 1.5 percent.

"The sizable rebound in growth will be partly driven by an improvement in the oil sector. As Saudi Arabia raises oil output, this will positively affect oil sector GDP, lifting it to 3.2 percent in 2018, compared to a decline of 3.0 percent in 2017," it said in a new report.

The consultancy expects the Kingdom's crude oil output to average 10.3 million barrels per day (mbp) over the course of the year, up from 10.1 mbp.

"As oil outages continue from OPEC members such as Libya and Venezuela, and US sanctions begin to take effect on Iran, we expect Saudi Arabia to make up a large portion of the expected deficit in oil market balances in H2 2018.”|

Meanwhile, Jadwa Investment maintained its forecast for non-oil GDP at 1.4 percent in 2018 compared to 1.0 percent in 2017. However, it expects non-oil private sector growth to rise to  1.1 percent this year from 0.7 percent last year.

According to official data released earlier this month, Saudi economy performed relatively well despite the implementation of major structural economic reform since the turn of the year. The Kingdom’s economy expanded by 1.2 percent in Q1, with non-oil private sector GDP rising by 1.1 percent.

Meanwhile, Jadwa Investment said the combination of higher oil prices and crude oil production will push up government oil revenue to SAR 576 billion this year, against budgeted oil revenue of SAR 492 billion.

It revised its Brent oil estimate to average $68 per barrel in 2018, up from $60 per barrel previously.

“As a result, the Kingdom’s fiscal deficit will decline to SAR 111 billion, or 3.8 percent of GDP, against SAR 195 billion outlined in the 2018 fiscal budget statement,” the consultancy noted.