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RIYADH: Saudi Arabia is expected to grow by around 10 percent in 2022, well above the current consensus expectations of 6.3 percent, according to a recent report by Capital Economics.
The economic research consultancy attributed future growth to the expected rise in oil sector output and the likelihood of a more relaxed fiscal policy in the Saudi economy.
Saudi Arabia's economy expanding at the fastest rate in a decade
Saudi Arabia’s economy expanded by a robust 2.2 percent quarter-on-quarter in Q1, which translates into year-on-year growth of 9.6 percent, the fastest rate since 2011, according to the report.
This expansion resulted from a rise in output from all sectors, but was mainly driven by a sharp rise in the oil sector which grew 2.9 percent over the quarters, reported the General Authority for Statistics.
Saudi Arabia continued to increase oil production in accordance with the OPEC+ deal, with last year’s 1 million barrel per day output cut creating favorable conditions that led to a boost in output by 20.4 percent.
Oil production in Saudi Arabia was 10.3 million bpd in March, which translated into a growth of 26.7 percent year-on-year.
It also marked the fastest pace recorded since 2003, said Capital Economics in another report released in April.
Non-oil sector plays pivotal role in Saudi Arabian economy
The non-oil sector saw a growth of 2.5 percent as the economy continues to move toward being fully reopened after the COVID-19 pandemic.
A previous report from Capital Economics also noted that the non-oil sector has rebounded strongly since the omicron wave ended in January 2022.
Last year’s advancement in the fourth quarter also led Capital Economics to forecast a robust growth rate for this year. Interestingly, the growth in the fourth quarter of 2021 was largely led by the non-oil sector which rose 4.9 percent.
Point of sales transactions rose from 2.1 percent 3m/3m in March to 5.0 percent over the first half of April. Furthermore, mobility declined only slightly in the country since the start of the holy month of Ramadan.