Jadwa Investment raises Saudi growth forecast to 2.7% in 2021

The Kingdom of Saudi Arabia’s flag

Saudi Arabia’s economy is on track to record a “very strong level” of growth this year, Jadwa Investment said, expecting the momentum to continue into 2022.

The Kingdom’s economy is forecast to grow at 2.7% in 2021, compared to 1.8% according to its previous estimates, the report said.

More specifically, the economy is likely to grow by 7% year-on-year in 2022 due to sizably higher oil sector growth and robust levels of non-oil growth.

The report anticipated higher crude oil production of 10.3 million barrels per day, up 14%, in 2022, in line with yearly rises in global oil demand. The higher output will help push up the oil sector gross domestic product (GDP) by similar levels.

On the non-oil side, despite moderation in year-on-year non-oil private sector growth, the economy will be driven forward by the continued implementation of Vision 2030.

“Indeed, the year ahead will mark a critical phase in the Kingdom’s efforts towards diversifying its non-oil economic base, guided by a set of recently unveiled five-year commitments (till 2025) under various Vision Realization Programs (VRPs),” Jadwa Investment noted.

At the same time, the Saudi economy will be supported by another sizable outlay in government expenditure, with the Public Investment Fund (PIF) and the National Development Fund (NDF) being the engines of capital deployment and economic development.

In addition, the continued improvement in the local economy during the remainder of the year and 2022 will positively impact credit to the private sector.

“Beyond the near term, we also expect to see an expansion in lending for the next phase of Vision 2030,” the report concluded.