Saudi Arabia on growth path buoyed by oil prices: Al Rajhi Capital

Steady crude oil prices and higher oil output, coupled with better non-oil growth, will aid Saudi Arabia’s economic recovery this year, Al Rajhi Capital noted in a research report on Sunday.

“Higher oil revenue and recent debt issuances have curbed the government’s need to tap its reserves to plug the fiscal deficit,” the brokerage firm notes in its latest Monthly Economic Report for September 2018, while maintaining that the Saudi economy continues to improve.

“The recent data released by SAMA indicates a continuous improvement in the Saudi economy. Credit to the private sector climbed for the fourth consecutive month (+0.7 percent y-o-y; +0.2 percent m-o-m) in July, while bank claims to the public sector also witnessed a rise (+24.2 percent y-o-y; +0.9 percent m-o-m),” the report noted.

Further, consumer spending continued to improve with POS transactions (+25.3 percent y-o-y; -0.6 percent m-o-m in July) and ATM withdrawals (+12.7 percent y-o-y; +2.4 percent m-o-m) witnessing a steady rise on annual basis.

The brokerage firm also revised its oil revenue estimates to SAR 605 billion (budgeted SAR 492 billion) and with budgeted non-oil revenue of SAR 291 billion, it expects the fiscal deficit to be SAR 82 billion for 2018 (58 percent lower than Government budget deficit estimate of SAR 194.7 billion).