RIYADH: Saudi Arabia’s economy is expected to grow this year, supported by the non-oil sector, despite a challenging global economic backdrop, the Saudi central bank governor said on Saturday as the kingdom hosts the G20 meeting.
Ahmed Al-Kholifey said it was too early to see the full picture of the economic damage caused by the new coronavirus, which has emerged in China and spread globally.
The Saudi Arabian Monetary Authority governor was speaking at an economic conference in Riyadh, where finance leaders of the world’s 20 largest economies have gathered this weekend to discuss policies and the impact of the virus on global growth.
“GDP growth in Saudi Arabia is projected to see an upturn in 2020,” said Kholifey. “Monetary, fiscal and structural policies in my country are all geared towards an expansion of the private non-oil sector GDP over the medium term,” he said.
The International Monetary Fund said in January it expects the Saudi economy to expand 1.9 percent this year, up from an estimated 0.4 percent in 2019. However, it lowered its forecast for the kingdom’s 2020 growth from 2.2 percent due to lower oil output.
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“We have a positive view on the Saudi economy, the forecasts are positive and growth is expected to be higher than last year, especially from the private sector,” Kholifey said.
After a bad year for the global economy last year, with the weakest global GDP growth since the financial crisis, Kholifey said Saudi Arabia was looking for “good news” this weekend.
“At our upcoming G20 meeting, we will be looking for good news from other countries as well, which overall will hopefully confirm the baseline projection that the growth slowdown has bottomed out and a turnaround in output growth in the current year can be expected, albeit a moderate one,” he added.
But he cautioned that trade tensions, geopolitical risks, and the outbreak of the new coronavirus were downside risks to global growth.
The comments came after the Institute of International Finance warned on Friday that the virus outbreak may curb demand for oil in China and other Asian countries, depressing crude prices further, to as low as $57 a barrel, and clouding growth prospects across the Middle East.
Even as the oil-based economy suffers, economists have said Saudi investments in non-oil infrastructure projects led by the Public Investment Fund will continue to support economic activity this year. Saudi non-oil economic output grew 4.33 percent in the third quarter of 2019, even though the overall economy contracted by 0.46 percent, hit by a drop in oil production.