Saudi economic growth to rise from 2.3% in 2018 to 2.4% in 2019: Fitch

Saudi Arabia’s real GDP growth is expected to post a modest acceleration in the coming quarters as expansionary fiscal policy supports non-oil investment and consumption, offsetting a slowdown in oil exports, Fitch Solutions noted in its latest report on Thursday.

“We forecast growth at 2.4 percent in 2019 and 2.6 percent in 2020, compared to an estimated 2.3 percent in 2018,” the report said.

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Fitch Solutions said this represents a continued gradual recovery from the 0.9 percent contraction recorded in 2017 on the back of lower oil prices and fiscal retrenchment, although it remains far below the 4.9 percent average seen over the decade preceding 2016.

The Saudi government, and potentially also government-linked entities such as the Public Investment Fund, plan to substantially increase investment in infrastructure and non-oil sector development over the quarters ahead. This is likely to generate opportunities for the non-oil private sector, the report maintained.

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Noting that non-oil private sector is likely to recover, Fitch Solutions said, “Readings have improved over H218, pointing to strengthening business confidence - a trend we expect will continue moving forward, further encouraged by rising oil prices.”