Anticipations for Saudi Arabia’s economy remain upbeat for the coming year, driven by a surge in consumer spending and robust non-oil sector activities.
Predictions suggest the nation’s gross domestic product (GDP) will grow by 4.4% in 2024, despite a downturn in oil revenue. This growth is largely attributed to the initiatives under Saudi Vision 2030, which are bolstering the non-oil economy, as highlighted in a report by AlJazira Capital.
The report further indicates that an uptick in consumer expenditures, coupled with low unemployment and a flourishing non-oil private sector, signals a healthy economic environment for Saudi Arabia.
An assertion within the report emphasizes that the private sector’s expansion, fueled by the ongoing implementation of Saudi Vision 2030 programs, will compensate for any shortfall in oil-generated funds, with non-oil revenues expected to ascend.
When compared to other major economies, Saudi Arabia’s projected annual GDP growth stands modestly below China’s 4.6% but surpasses that of emerging economies at 4%, the Euro area at 1.2%, and the United States at 1.5%.
Although oil revenues are forecasted to decline to SAR 752 billion ($200.5 billion) in 2023 as a result of production cuts, non-oil revenues are poised to increase to SAR 441 billion, up from SAR 411 billion in the previous period.
The kingdom’s government is set to continue its expansionary fiscal approach through the Public Investment Fund (PIF), which is expected to bolster GDP stemming from non-oil activities and alleviate the impacts of reduced oil income.
The report by AlJazira Capital also draws attention to Saudi Arabia’s debt levels, which are considered moderate at 25.9% of the forecasted GDP and relatively comfortable compared to other countries. However, it acknowledges that achieving the ambitious objectives of Vision 2030 will require substantial funding, with the ensuing budget deficit for the fiscal year 2023-2024 likely to be financed largely through debt. The report concludes that the kingdom’s favorable debt profile is anticipated to support the government’s expansive spending ambitions.