Growth is expected to pick-up further over the medium-term as the reforms take hold and oil output increases
The International Monetary Fund (IMF) has concluded that real GDP growth in Saui Arabia is expected to increase to 1.9% in 2018, with non-oil growth strengthening to 2.3%.
Growth is expected to pick-up further over the medium-term as the reforms take hold and oil output increases.
Risks are balanced in the near-term.
CPI inflation has increased in recent months with the introduction of the value-added tax (VAT) and higher gasoline and electricity prices, and is forecast at 3% in 2018, before it stabilizes at around 2% over the medium-term.
The fiscal deficit is projected to continue to narrow, from 9.3% of GDP in 2017 to 4.6% of GDP in 2018 and then further to 1.7% of GDP in 2019.
With oil prices implied by futures markets declining over the medium-term, the deficit is then projected to widen.
The deficit is expected to continue to be financed by a combination of asset drawdowns and domestic and international borrowing.
The current account balance is expected to be in a surplus of 9.3% of GDP in 2018 as oil export revenues increase and remittance outflows remain subdued.
The Saudi Arabian Monetary Authority’s (SAMA) net foreign assets are expected to increase this year and over the medium-term.
Reforms are also ongoing to improve the business environment, develop a more vibrant small and medium enterprises (SME) sector, deepen the capital markets, increase the involvement of women in the economy, and develop new industries with high potential for growth and job creation.
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