The Saudi economy is continuing to grow robustly and surpluses in the both the budget and the current account will continue in 2014, according to the July economic report published today by Saudi Arabias Jadwa Investment.
The economy was robust in May. Indicators of consumer spending hit new highs, Jadwa said. Bank claims on the private sector continued to increase at a healthy pace in May. Bank claims on government and quasi-government institutions also maintained a positive trend in May, albeit at a slower pace than in the previous two months.
Jadwa reported that other recent features of the Saudi economy included:
- Bank deposits maintained positive annual growth rates in May
- Year-on-year inflation was unchanged in May at 2.7 per cent. Rising core inflation was offset by a fall in both food and housing and related items inflation
- Non-oil exports fell in April, but imports remained high. Much of the decline in exports was due lower exports of petrochemicals and plastic, which together have accounted for 65 per cent of total non-oil exports since the start of the year, Jadwa said.
Jadwa forecasts that the rate of growth in the Saudi economy will accelerate to 3 per cent in nominal terms. The rate of growth in inflation-adjusted terms will be 3.6 per cent compared with 3.8 per cent in 2013.
Jadwa forecasts that the kingdom will continue to record exceptionally high surpluses. It says the budget balance will be $38.1bn in 2014, equivalent to 5 per cent of Saudi GDP this year. The current account deficit will fall to about $97bn this year compared with $134bn in 2013.
The projection is based on Saudi oil prices averaging $100 a barrel in 2014, compared with $104.2 a barrel in 2013, and Saudi oil production averaging 9.4 million barrels a day (b/d) compared with 9.6 million b/d last year.
|The Saudi economy, 2013-14|
|Nominal GDP ($bn)||745.3||767.3|
|Budget balance ($bn)||55.0||38.1|
|Current account balance ($bn)||134.3||96.7|
|f=Forcast. Source: Jadwa Investment, July 2014|