Saudi economy eyes 0.5% growth in 2019: report

The Saudi Arabian economy is set to see minimal growth of around 0.5 percent in 2019, below the average of 2.2 percent in 2018, according to ICAEW’s latest Economic Update report.

“Job creation in the private sector remains crucial to Saudi Arabia achieving long term fiscal sustainability,” the accountancy and finance body said in the report.

The report also noted that the Saudi economy continues to tread slowly towards economic diversification and improving the overall business environment.

“The non-oil private sector expanded by 2.3 percent in Q1 2019 – the fastest in six quarters – and, in June the Purchasing Managers Index (PMI) reached its highest level since Dec. 2017. However, the Saudi economy remains closely linked to oil-sector developments,” the report noted.

The report stated that the employment sub-index of the PMI survey has remained close to the neutral level of 50 for over two years, partially due to squeezed profit margins, as firms grapple with rising input costs and discounted selling prices amid strong competition.

“We applaud the necessary reforms the Saudi government has implemented to achieve economic diversification and to improve the overall business environment,” Michael Armstrong, FCA and ICAEW Regional Director for the Middle East, Africa and South Asia (MEASA), said.

“In order to achieve Vision 2030 goals, improvement of the overall business environment through pro-business policies and initiatives is a must, especially addressing the high unemployment level in the private sector as this is a key area of growth for Saudi Arabia.,” Armstrong added.

On a positive note, the Saudi government posted a $7.4bn budget surplus in Q1 this year, the first in almost five years.