Saudi Arabia’s non-oil sector is expected to grow faster than last year as investments and increased government activity in the sector pick up the pace.
Bloomberg Economics’ monthly monitoring of Saudi GDP indicates that the country’s non-oil sector grew by one percent in January, slowing down from the estimated 2.6 percent registered at the end of last year.
“However, this should pick-up,” said Ziad Daoud, chief Middle East economist, Bloomberg Economics, as government spending increases along with recently announced royal handouts. “We expect non-oil growth to average 2.7 percent in 2018, better than it’s done in the last two years.”
The Bloomberg Monthly GDP for Saudi Arabia analyses a variety of oil and non-oil indicators, including monetary and financial variables such as real ATM cash withdrawals, money supply growth, points of sales transactions and bank clearings of cheques.
Ratings agency Moody’s expects the Saudi economy to grow by 1.3 percent this year, after contracting by 0.7 percent in 2017.
The Organization for Petroleum Exporting Countries' agreement to freeze crude oil production at current levels until the end of 2018 remains a headwind for the country’s growth prospects, but growth will come from “recovering oil prices, record budget expenditure and government efforts to protect households from the impact of economic reforms,” said Olivier Panis, vice president and senior credit officer, Moody's.
