Saudi real GDP to grow 3.4% in 2015: NCB

Saudi Arabia’s real GDP will grow 3.4 percent this year on the expectation that the kingdom’s non-oil sector will maintain five percent growth, the National Commercial Bank (NCB) predicted in its Saudi Economic Perspectives 2015-2016 report.

The report also attributed growth in the non-oil private sector to a series of royal decrees announced in January and April, which provide favorable stimulus to the real estate and construction sectors. It also expects a two-month salary bonus distributed earlier this year to help boost the economy.

NCB also expects the Saudi Arabian Monetary Agency, the kingdom’s central bank, to increase its repo and reverse repo rates for the first time since 2009, if and when the U.S. Fed raises its target funds rate by the end of the year.

The report comes on the back of an IMF review, which lifted its outlook for the Saudi economy in 2015. The IMF said it expects GDP to grow 3.5 percent this year, but slow to 2.7 percent in 2016, as government spending later adjusts to lower oil prices.

In 2014, real GDP grew for the fifth year in a row at an annual rate of 3.6 percent, supported by non-oil private sector growth of 5.7 percent.

The kingdom’s private sector also increased its contribution to real GDP to 39.5 percent, as the construction, manufacturing and trade sectors were identified as the key growth drivers.

However, economic growth in nominal terms was lower than 2013, reaching 1.09 percent, as oil prices began their decline.