Jadwa cuts inflation forecast in Saudi Arabia to 1.7% till year-end

Riyadh City

Jadwa Investment lowered its forecast for overall inflation in Saudi Arabia from 2% to 1.7% until the end of 2024.
 

In a recent report, Jadwa expected strong growth in Saudi Arabia’s non-oil economic activity for the rest of the year and through 2025.
 

"We believe that the Saudi economy is well positioned to weather softness in oil markets, given the strong sovereign balance sheet, the financial strengths of other key entities, such as the PIF and NDF, and the ongoing reform and investment drive across the economy," Jadwa noted.
 

It added that the Saudi crude production is set to contract more sharply in 2024 than earlier anticipated. As per OPEC+’s latest meeting, current Saudi output of 9 million barrels per day (mbpd) is extended until the end of Q3, and is planned to gradually increase in the following 15 months. As a result, Saudi production is expected to average around 9 mbpd in 2024, before rising to 9.5 mbpd in 2025.
 

"We have also revised our oil price forecast. We forecast the Brent crude price to average $84 pb in 2024, broadly in line with the average over the last 18 months. For 2025, we forecast a lower average price of $82 pb due to challenges to global GDP growth and oil supply gains," Jadwa said.
 

Overall, the hydrocarbons GDP is expected to contract this year by around 6% in real terms, which will mean the overall economy grows by 1.5%.
 

Jadwa forecasts a budget deficit of SAR 83 billion or 2% of GDP in 2024, repeating the performance of 2023. The non-oil revenue picture remains positive, following a strong performance in H1 2024.