An economic report expected a gradual quarter-on-quarter improvement in the Saudi economy during the remainder of the fourth quarter of 2020 and next year, indicating that this recovery would be more robust during the second half of 2021.
Jadwa Investment’s report expected a large-scale recovery next year in the Saudi economy.
The time-frame in Jadwa’s estimates assumes the launch of large quantities of the vaccine against Covid-19 by mid-2021, as the Saudi Ministry of Health recently announced the start of registration for the free vaccination for citizens and residents alike.
Jadwa explained that the gross domestic product in 2020 has been affected by a decline in both the oil and non-oil sectors. In fact, Saudi oil production is expected to reach 9.2 million barrels per day in 2020 compared to an average of 9.8 million barrels per day during the same period last year.
It is estimated that the average inflation rate for 2020 as a whole will rise to 3.7%, then reach 2.9% in 2021, due to the expected impact of the increase in value-added tax and customs duties on some products.
Saudi Arabia had announced the state budget with spending amounting to 990 billion riyals ($264 billion), and revenues estimated at 849 billion riyals ($226.4 billion), with an estimated deficit of 141 billion riyals ($37.6 billion), which represents 4.9% of the GDP, compared to a deficit of 298 billion riyals, which represents 12% of GDP in 2020.
In addition, the Jadwa Saudi Budget report said that capital spending would be strengthened with the support of the Public Investment Fund (PIF).
As part of its continuous efforts to strengthen and diversify the economy, the PIF would pump about 150 billion riyals ($40 billion) annually into the local economy in 2021 and 2022, leading to an increase in cumulative investments to 611 billion riyals ($163 billion) in the domestic economy between 2017 and 2022.
