Saudi’s economic fortunes rest on non-oil sector: report

Despite the rebound in the Saudi oil output, it is on the non-oil sector that the kingdom’s economic fortunes will ultimately rest, National Bank of Kuwait (NBK) said in its latest report.

With Saudi Arabia signing up to another round of OPEC+ production cuts for the duration of H1 2019 in order to stabilize oil prices that had dropped by more than 30 percent since October, crude output is not expected to increase above 10.2-10.3 million barrels per day (mbd), NBK noted.

Consequently, oil GDP gains in 2019 and 2020, at 0.2 percent and 1.2 percent, respectively, will be limited, and reflect primarily increased gas production and crude flows to feed expanding refinery operations, namely the 400,000 mbd Jazan refinery, which went on line in 2018, the report added.

NBK report said Saudi non-oil activity has been increasing amid record budget outlays of SAR 1 trillion-plus and a renewed government focus on the private sector—the second phase of the SAR 72 billion ($19 billion), four-year private sector stimulus plan was launched in November—and on capital intensive projects.

Billions have been pledged on housing, tourism, transportation, power and education projects, it added