JEDDAH: Fiscal consolidation, coupled with improved non-oil revenues, will mean a smaller-than-anticipated fiscal deficit in Saudi Arabia in both 2016 and 2017, according to economists.
In their latest macroeconomic update, researchers from Jadwa Investment have also revised some of their 2016 and 2017 forecasts to take into account the recent set of fiscal reforms and economic data.
“Since the start of 2016, and in line with targets specified in the National Transformation Program (NTP 2020), prudent policies to reform the fiscal budget have been taken,” said Fahad Alturki, chief economist and head of research at Jadwa Investment in Riyadh.
The commencement of an international sovereign bond issuance program will have a dual benefit of protecting FX reserves and reducing pressure on domestic liquidity, according to the Jadwa report.
The Jadwa economists expect the Ministry of Finance to take steps to gradually register, list and trade government debt instruments on the Saudi stock exchange, thereby establishing a benchmark yield curve. “Meanwhile, the current account deficit is also forecast to be smaller than anticipated, mainly due to lower-than-expected value of imported goods and services,” said the report.
“Along with the international bond issuance, several other efforts by the government have halted the sharp rise in the cost of funding, as interbank rates have stabilized recently,” said the economists.
“Despite the hike to energy prices at the end of 2015, inflation continued on a decelerating trend, which we believe is reflective of the slowdown in consumption,” they said.
The Jadwa researchers expect Saudi Arabia’s economic performance to remain positive for the remainder of 2016.
“We forecast overall GDP growth to reach 1.1 percent and 0.6 percent in 2016 and 2017, respectively, with oil sector GDP growing by 2.1 percent and 0.6 percent over the next two years,” said the economists.
Non-oil GDP is forecast to reach 0.3 percent and 0.5 percent during the same period, they said.
“The contribution of oil production to annual economic growth is likely to remain on the positive side. Albeit at a slower pace, we expect private sector growth to remain positive at 0.7 percent, as the recent moderation in credit growth is expected to ease following the recent issuance of international sovereign bonds and the resumption of government payments,” said the Jadwa report.
Business surveys point toward an expansion in the non-oil private economy in 2016, with the non-oil purchasing managers’ index averaging 54.8, year-to-October, slightly down from the full-year average of 56.7 in 2015. Year-on-year growth in broad money supply (M3) turned positive in October for the first time since the start of 2016, according to the report.
Saudi economic performance to remain positive this year
Saudi economic performance to remain positive this year
Saudi Arabia’s industrial output rises 10.4% in November: GASTAT
RIYADH: Saudi Arabia’s industrial output rose at its fastest rate in months, climbing 10.4 percent year on year in November, supported by stronger manufacturing activity and higher oil production, official data showed.
The Industrial Production Index increased to 114.4, up from 103.6 a year earlier, according to the General Authority for Statistics, though the index slipped 0.7 percent from October.
The latest figures highlight continued momentum in the Kingdom’s industrial sector as Saudi Arabia pursues economic diversification under its Vision 2030 agenda.
In its latest report, GASTAT stated: “Preliminary results indicate an increase of 10.4 percent in the IPI in November 2025 compared to the same month of the previous year, supported by the rise in mining and quarrying activity, manufacturing activity and water supply, sewerage and waste management and remediation activities.”
The sub-index of mining and quarrying activity increased by 12.6 percent year on year in November, supported by Saudi Arabia’s decision to raise oil production to 10.1 million barrels per day, compared to 8.9 million bpd a year earlier.
Manufacturing activity rose by 8.1 percent compared to November 2024, driven by a 14.5 percent increase in the production of coke and refined petroleum products. The manufacture of chemical products also recorded a 10.9 percent annual rise.
In contrast, the sub-index of electricity, gas, steam, and air conditioning supply declined by 4.3 percent year on year, while water supply, sewerage and waste management and remediation activities rose by 10.2 percent.
On a month-on-month basis, the overall IPI fell by 0.7 percent in November.
Mining and quarrying activity rose by 0.5 percent from October, while manufacturing activity edged up by 0.3 percent.
However, electricity, gas, steam, and air conditioning supply recorded a sharp monthly decline of 28.6 percent. Water supply, sewerage and waste management and remediation activities fell by 3.1 percent over the same period.
Overall, the index of oil activities advanced by 12.9 percent year on year in November, while non-oil activities increased by 4.4 percent.
Compared to October, oil activities rose by 0.4 percent, while non-oil activities declined by 3.4 percent.
The IPI measures changes in industrial output based on the International Standard Industrial Classification framework and covers mining, manufacturing, utilities, and waste management sectors.
