DUBAI: The Saudi Arabian economy will expand by 2 percent this year with the non-oil sector getting a boost from higher crude prices and government spending likely to rise further in 2019, an Emirates NBD Research report said on Sunday.
But the growth estimate was lower than the official government projection of 2.4 percent, the report noted.
“Even taking the OPEC agreed production cuts which came into effect at the start of the year, we think average oil production in KSA will be at least 1 percent higher on average than 2018,” Khatija Haque, Emirates NBD’s head of MENA Research, said.
“We expect non-oil sector growth to accelerate to 2.8 percent as the lagged effect of higher oil prices and production feeds through to the non-oil sectors, and as government spending is likely to rise further this year.”
But the cautious economic outlook for Saudi Arabia is also true for the wider GCC region, Haque noted, considering a ‘slowing global growth and heightened geo-political risks globally.’
Average growth for the GCC states this year is forecast at 2.5 percent, with the UAE and Qatar likely to report faster growth rates, after the regional economy rebounded in 2018, driven by higher oil output.
Meanwhile for 2018, average GDP growth was pegged at 2.4 percent.
“Production in Q4 2018 was much higher than we had expected and as a result, the hydrocarbons sector contributed positively to overall GDP growth in the GCC last year,” the report said.
Emirates NBD Research has revised its oil forecasts for 2019 lower to an average of $65 a barrel for Brent, against the more than $70 a barrel previously.
“We expect budget deficits to widen modestly this year, based on our assumption of an average Brent oil price of $65 a barrel and increased government spending,” the report noted.
“The introduction of VAT in Bahrain and potentially Oman (the latter expected in September 2019) should help these countries address their sizable budget deficits, although other fiscal reforms will need to be undertaken to sustain any improvement over time,” it added.
Saudi Arabia has programmed a 7.2 percent rise in its budget this year to 1.1 trillion Saudi riyals, majority of it allocated for education and military spending, on a projected deficit of 4.2 percent.
Saudi economy forecast to grow 2% on stronger non-oil sector, higher government spending
Saudi economy forecast to grow 2% on stronger non-oil sector, higher government spending
- But the growth estimate was lower than the official government projection of 2.4 percent
- Saudi Arabia has programmed a 7.2 percent rise in its budget this year to 1.1 trillion Saudi riyals
Closing Bell: Saudi stocks slip as Tadawul falls 1% amid broad market weakness
RIYADH: Saudi stocks fell sharply on Tuesday, with the Tadawul All Share Index closing down 108.14 points, or 1.03 percent, at 10,381.51.
The broader decline was reflected across major indices. The MSCI Tadawul 30 Index slipped 0.78 percent to 1,378.00, while Nomu, the parallel market index, fell 1 percent to 23,040.79.
Market breadth was strongly negative on the main board, with 237 stocks falling compared to just 24 gainers. Trading activity remained robust, with 164.7 million shares changing hands and a total traded value of SR3.19 billion ($850.6 million).
Among the gainers, SEDCO Capital REIT Fund led, rising 2.73 percent to SR6.77, followed by Chubb Arabia Cooperative Insurance Co., which gained 2.69 percent to SR20.20.
National Medical Care Co. added 1.72 percent to close at SR141.60, while Alyamamah Steel Industries Co. and Thimar Advertising, Public Relations and Marketing Co. advanced 1.57 percent and 1.13 percent, respectively.
Losses were led by Al Masar Al Shamil Education Co., which tumbled 8.36 percent to SR24.65. Raoom Trading Co.fell 6.75 percent to SR64.20, while Alkhaleej Training and Education Co. dropped 6.60 percent to SR18.12 and Naqi Water Co. declined 5.51 percent to SR54.00. Gulf General Cooperative Insurance Co. closed 5.44 percent lower at SR3.65.
On the announcement front, Chubb Arabia Cooperative Insurance Co. signed a multiyear insurance agreement with Saudi Electricity Co. to provide various coverages, expected to positively impact its financial results over the 2025–2026 period. The deal will run for three years and two months and is within the company’s normal course of business.
Meanwhile, Bupa Arabia for Cooperative Insurance Co. announced a one-year health insurance contract with Saudi National Bank, valued at SR330.2 million, covering the bank’s employees and their families from January 2026. Despite the sizable contract, Bupa Arabia shares fell 0.8 percent to close at SR137, weighed down by the broader market weakness.
In contrast, United Cooperative Assurance Co. revealed an extension of its engineering insurance agreement with Saudi Binladin Group for the Grand Mosque expansion in Makkah. The contract value exceeds 20 percent of the company’s gross written premiums based on its latest audited financials and is expected to support results through 2026. However, the stock came under selling pressure, ending the session down 4.51 percent at SR3.39.
