Saudi central bank warns global slowdown may hit growth

Saudi Arabia's economy is expected to pick up in 2019 but a global economic slowdown and its potential impact on the global oil market could impact growth, the Kingdom's central bank said.

Saudi Arabia's economy grew by 2.2 percent in 2018, driven by the oil sector, compared to a decline of 0.7 percent in 2017, the Saudi Arabian Monetary Authority (SAMA) said in a report.

The main risk for the Saudi economy comes from its exposure to the global oil market. The oil sector accounts for some 45 percent of Saudi GDP and more than 63 percent of government revenue. “There have been recent signs of slowing global growth, which could indirectly impact the Saudi economy,” the report warned.

“Continued structural reforms will likely place some pressure on economic growth in the short-term,” it added, without giving a forecast for 2019.

In April the International Monetary Fund (IMF) estimated that Saudi economic growth in 2019 may be slightly higher than its earlier 1.8 percent forecast due to the faster expansion of the non-oil sector compared to the wider economy.

For the non-oil sector, growth is expected to be stimulated by expansionary fiscal policy as the budget for 2019 shows a significant increase in capital expenditure by SAR 245 billion ($65.3 billion), the report said.

Saudi Arabia's s non-oil sector saw modest growth of 1.7 percent in 2018 versus 1 percent in the previous year, SAMA said.