Saudi GDP to grow by 1.5% in 2018: Jadwa

Saudi Arabia's economy is expected to grow by 1.5 percent in 2018 compared to a contraction of 0.7 percent last year, Jadwa Investment said in its latest report.

The oil sector is set to grow by 1.5 percent versus a 3 percent decline in 2017, driven by slight rise in crude output and the start-up of Jizan refinery in 2018.

The non-oil private sector will grow by 1.1 percent in 2018 versus 0.7 percent in 2017, supported by a raft of measures that include energy price reform, value-added tax (VAT), levies on expatriates and white land taxes.

“We expect an improvement in the Saudi economy in the year ahead, supported by the oil and non-oil sector. Oil sector gross domestic product (GDP) is expected to improve, in part, due to rises in oil production as OPEC and non-OPEC countries gradually exit from cuts at some point during the year,” said Fahad Al-Turki, Jadwa’s chief economist.

The research firm considered the new fees and measures as “the biggest risk” to growth, saying: “Whilst consumer spending could be affected by the implementation of VAT, energy price reform will impact the running costs of private companies and discretionary income of a number of more affluent households,” Al-Turki said.

Expansionary measures, implemented through the private sector stimulus package, payments received under the Citizens Account and the newly-introduced cost of living allowances, will be sufficient to bring about solid growth.