Saudi Arabia’s 9.9% GDP growth to achieve budget surplus, benefit local firms: analysts

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Saudi Arabia’s real gross domestic product (GDP) growth of 9.9% in the first quarter of 2022 is expected allow for budget surpluses and benefit domestic companies through government spending, analysts told Argaam.

“We are very fortunate to have significant growth in GDP resulting from the rise in oil revenue, given the current conditions of the world economy,” Mohammed Al Suwayed, CEO of Razeen Capital, said.

It will lead to budget surpluses this year, even if fiscal policy temporarily shifts to expansionary, he added.

There is a marked difference in the growth rates of various sectors, Al Suwayed said. Building, construction and real estate showed weak growth, while financial services, transport, warehousing, wholesale and retail trade displayed high growth rates even when compared on an annual basis to pre-pandemic 2019.

Al Suwayed pointed to the importance of noting the continued growth of gross fixed capital formation due to the private sector, which saw nearly 20% increase during Q1 2022 compared to the same period a year ago, and about 40% growth when compared to 2019.

Meanwhile, Abdul-elah Qasim, a financial analyst, said that the announcement will benefit Saudi companies through government spending, increasing the number of jobs, reducing unemployment and accelerating the completion of planned projects.

Economic growth is due to a significant rise in oil activities, Qasim said.

He also expects GDP growth rates to rise in the coming quarters due to the stability of average oil prices at their highest levels in the past 10 years and increased income rates from non-oil activities. In addition, increased numbers of Umrah and Hajj pilgrims as well as tourists will increase income through consumption, he said.