What analysts expect for Saudi Arabia in 2024?

The Kingdom of Saudi Arabia's flag

In this report, Argaam monitors the opinions of global financial institutions and research houses on the performance of the Saudi economy in 2023. It also sheds light on their key economic and financial expectations and trends for 2024, and the Saudi benchmark TASI.  

International institutions like the International Monetary Fund (IMF) and the World Bank see a leap in the growth of non-oil activities in the Kingdom and the region, as there is still a strong growth momentum in the non-oil sectors. The World Bank expects the non-oil economy to grow, while the IMF set the fair price of oil in the Kingdom’s 2024 budget at $75.1 per barrel. 

SNB Capital said that the Kingdom will likely be the shining star in economic performance among emerging markets, driven by projects under Vision 2030, finalizing the first phase of many of these projects, and benefiting from hosting several global events. 

The Saudi economy is projected to grow by 4.4% in 2024, spurred by strong growth in the non-oil sector, it added. 

According to SNB Capital, further economic reforms, coupled with ambitious strategies and programs by the government, accelerating the pace of mega projects and the continued active role of the Public Investment Fund will be the main driver for economic activity. 

AlJazira Capital expected the Kingdom's GDP to rise by 4.4% in 2024, backed by the private sector growth within the framework of Vision 2030, so that the growth in the non-oil sector offsets declines in oil activity. It also expected Brent crude to stabilize at $80 per barrel in 2024. 

The brokerage also sees that this will reflect positively on TASI, which is set to see strong rise this year, driven by the expected cut in interest rates. It predicted that GDP will grow at an accelerated pace, backed by government spending and the implementation of a number of mega projects. 

Meanwhile, Al Rajhi Capital forecasts average oil prices to range between $75 and $85 per barrel, taking into account OPEC’s output discipline. Moreover, the inventory levels at the Organization for Economic Co-operation and Development (OECD) indicate that there is no oversupply and that the market remains balanced. 

Based on its assessment, Al Rajhi Capital suggested that the Saudi government’s budget revenues will rely on a Brent crude price of $80 per barrel. It added that the increase in revenues as a result of Aramco's performance-related dividends could help the government receive additional dividend revenues of SAR 130 billion, noting that the current debt-to-GDP ratio is well below 30%. 

As for the performance of Tadawul, Al Rajhi Capital expects TASI to move higher, adding that the tourism and transportation sectors are poised for growth in the coming period until the date of hosting Expo 2030 and beyond, driven by the strong expansion in the Kingdom's non-oil GDP. It also indicated that developing legislations in the logistics services sector paves the way to fill the infrastructure gap, expecting investments to contribute to revitalizing the sector’s environment. 

Commenting on Saudi Arabia’s 2024 budget, Jadwa Investment said that it does not expect an actual reduction in spending in 2024, citing a remarkable acceleration in project activity in the Kingdom. It also highlighted that the Kingdom’s hosting of Expo 2030 and resulting spending reinforce those predictions. It pointed to the upward trend in budget spending estimates in the medium term, as public expenditure was estimated at SAR 1.25 trillion in 2024, an increase of 11% from 2023. 

According to Kamco Invest, the region's financial markets showed mixed performance, which was weaker than expected. It also highlighted the strong performance of Tadawul, which posted gains despite the decline in oil prices, leveraging the strong IPO activity that saw seven new offerings on the main market and 32 offerings on the Nomu-Parallel Market. At the sector level, Kamco Invest sees that most sectoral indices have generally witnessed growth, topped by pharmaceuticals, insurance and healthcare.