Saudi Arabia’s public finances are on a more sustainable footing thanks to higher oil and non-oil revenues as well as more targeted spending, said the latest MENA Economic outlook (2019-2020) by National Bank of Kuwait (NBK).
Saudi non-oil activity has been increasing amid record budget outlays of SAR 1 trillion-plus and a renewed government focus on the private sector—the second phase of the SAR 72 billion ($19 billion), four-year private sector stimulus plan was launched in November—and on capital intensive projects, NBK report added.
The report said government investment is expected to continue spearheading the kingdom’s development and diversification plan. While visible improvements have been made in the fiscal, economic and regulatory spheres, the outlook is still very dependent on the trajectory of oil prices.
Overall, NBK report said, GCC economic growth is expected at 2.3 percent and 2.6 percent in 2019 and 2020, respectively, supported mainly by expansive public spending and private sector stimulus.
For the GCC oil producers, the softer oil price outlook for 2019-2020, coupled with production cuts, will likely delay the process of fiscal balancing and, in the process, place added pressure on the non-oil sectors to drive revenue growth and real output gains, NBK report said.
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