Non-oil GDP down as rising costs hit home, government spending to boost economy
Bloomberg Economics monthly series of Saudi GDP has indicated that non-oil growth grew to 1.0% in January. This represents “a slowdown from the estimated 2.6% registered at the end of last year” said the service created by Ziad Daoud, chief Middle East economist, Bloomberg Economics.
The Bloomberg Monthly GDP for Saudi Arabia provides analysis based on the latest oil and non-oil indicators. According to the service, the model makes use of monetary and financial variables such as real ATM cash withdrawals, money supply growth, points of sales transactions and bank clearings of cheques.
“Sluggish private consumption, due to cuts to fuel and electricity subsidies, the introduction of VAT and rising inflation, is likely the main culprit behind the slowdown of non-oil activity in January,” said Daoud. “However, this should pick-up due to increased government spending and recently announced royal handouts. We expect non-oil growth to average 2.7% in 2018, better than it’s done in the last two years.”
Walid Majdalani, co-head of Corporate Investment for Mena (Middle East, North Africa) at Investcorp told Gulf News this week that his company still regards Saudi Arabia as well as the UAE as the leading markets for growth in the region.
“Those [Saudi, UAE] economies are growing, perhaps lower than the previous year and each of these governments have announced quite ambitious budgets and quite ambitious projects which we tend to look into for opportunities,” he told the newspaper. “2017 was a tough year and 2018 looks potentially difficult moving forward but there is no doubt that there is an improvement in the overall economic conditions in this part of the world with privatisation initiatives.”