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Saudi Arabia’s oil revenues in the second quarter are expected
to surpass $35 billion.

IMF hikes Saudi Arabia’s 2018 growth forecast

RIYADH, August 1, 2018

The International Monetary Fund (IMF) has raised Saudi Arabia’s 2018 growth forecast to 1.9 per cent as against 1.7 per cent projected earlier on account of higher oil output amid firm crude oil prices and structural reforms, said a new report.

It projects the fiscal deficit to shrink from 9.3 per cent of GDP in 2017 to 4.6 per cent and 1.7 per cent in 2018 and 2019, respectively, said the latest Economic Research report by Al Rajhi Capital, a leading financial services provider in the kingdom.

Post the increase in oil prices and exports, Al Rajhi expects oil revenues in the second quarter (Q2) to reach SR134 billion ($35.7 billion) while for the full year it is expected to touch SR547.5 billion ($145.8 billion), which is 11.3 per cent higher than the budget target of SR492 billion ($131.1 billion).

This is likely to lower deficit by 28 per cent in 2018, according to the report.

Meanwhile, the economic indicators for June appear to be progressing well with SAMA foreign reserves showcasing a rise (+0.4 per cent m-o-m) after a brief drop last month, driven by the recent debt issuances by the government.

However, credit to the private sector edged down (-0.1 per cent m-o-m) in June, whereas bank claims on the public sector increased (+0.4 per cent m-o-m). Further, POS transactions continued its march upwards in June, backed by the ‘Restaurants and Hotels’ and ‘Food and Beverage’ segments.

Meanwhile, remittances by Saudi nationals increased (+13.3 per cent y-o-y) in June, while those from non-Saudi nationals also recorded a rise (+1.7 per cent y-o-y). However, the cost of living index rose at a slower pace (+2.1 per cent y-o-y) in June, weighed down by the fall in the ‘Housing, Water, Electricity, Gas’ sector which constitutes around a quarter of the  index.

“Overall, we continue to believe that higher oil output amid firm oil prices, along with improving non-oil sector will ensure a sustainable economic recovery in 2018,” Al Rajhi said in the report. – TradeArabia News Service

Tags: Saudi Arabia | GDP | reforms | oil price | IMF |

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