Saudi investment bank Jadwa Investment has raised its growth forecast for Saudi Arabia this year after the kingdom's economy showed strong expansion in both oil and non-oil activities in the first half of 2022.
Gross domestic product of the Arab world's largest economy is now forecast at 8.7 per cent compared with a previous 7.7 per cent estimate after it expanded 3.2 per cent in 2021, Jadwa said in a new report.
The investment bank's estimate is higher than the International Monetary Fund's 7.6 per cent forecast for this year. The kingdom’s economy is set to grow at the quickest pace in a decade and could be one of the world’s fastest-growing economies this year, the IMF said in August.
Saudi Arabia’s economy grew 12.2 per cent in the second quarter, exceeding initial estimates and registering the fastest expansion since the third quarter of 2011. This was due to higher oil prices, data from the kingdom’s General Authority for Statistics showed earlier this month. The expansion followed the kingdom posting the strongest growth rate among the world's largest economies in the first quarter of this year.
Oil GDP is expected to rise by an annual 16.6 per cent in 2022 compared with a previous 15.5 per cent estimate, Jadwa said. Non-oil growth is forecast to rise by 4.3 per cent, primarily due to higher non-oil private sector growth of 4.4 per cent, compared with a previous 3.4 per cent forecast.
Oil GDP will continue to grow in the second half the year, due to higher annual Saudi oil output and continued growth in the petroleum refining sector. However, this growth would be at a slower rate than in the first six months of 2022, the investment bank said.
It projects government revenue will increase by an annual 38 per cent to about 1.338 trillion riyals ($357 billion) in 2022. Jadwa said there would also be a fiscal surplus totalling 335bn riyals, which is equivalent to 8.7 per cent of GDP.
Despite a surge in oil prices during the second quarter of this year, Jadwa maintained its forecast for Brent, the benchmark for two-thirds of the world's oil, at $102 per barrel for 2022. It said there would be a slight upward revision in the kingdom’s average oil output to 10.6 million barrels per day from 10.5m bpd.
"Looking forward, we expect this growth to continue in the second half of the year, which, in turn, has led us to upgrade our full year 2022 GDP forecast," Jadwa said. "More specifically, we see higher growth in three sectors: non-oil manufacturing, wholesale and retail trade, restaurants and hotels and transport, storage and communication."
The non-oil manufacturing’ sector grew by 8 per cent in the first half of the year from the same period a year earlier. This was due to an increase in the value of the kingdom’s non-oil exports.
The Index of Industrial Production surged an average of 23 per cent in the year to July. This was buttressed by more than 700 new industrial factories that started production, which are worth 21 billion riyals and created 31,000 new jobs over the same period.
Continued growth of non-oil exports combined with a rise in investments in manufacturing will provide additional support to the sector’s expansion, Jadwa said.
After growing by 8.6 per cent In the year to July 2022 from the same period in 2021, consumer spending rose is expected to remain strong in the second half of the year. More planned entertainment, leisure and sports events, in addition to the recently issued Hayya card that allows access to the kingdom for World Cup visitors in neighbouring Qatar, will spur growth.
Inflation in the kingdom rose by an average of 2.2 per cent during the year to August. This makes Saudi Arabia one of the G20 countries with the lowest levels of inflation. Inflation in the US and UK is at four-decade highs and at record levels in Europe.
The kingdom's transport, storage and communication sector expanded by 6.8 per cent year-on-year in the first of 2022 as most travel restrictions related to Covid-19 were lifted. This paved the way for a rebound across all of the sector's main segments.
Saudi Arabia Railways carried more than 2.3 million passengers in the first six months of the year. This was a 121 per cent increase from the same period last year, in addition to a 24 per cent jump in cargo transportation.
Growth of the sector is expected to continue in the second half of the year on higher inbound and outbound travel. Jadwa said this would also result from more programmes and projects being introduced under the National Transport and Logistics Strategy, which was announced in June 2021.
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New Zealand police began closer scrutiny of social media and online communities after the attacks on two mosques in March, the country's top officer said.
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The figure was broadly flat immediately before the Covid-19 pandemic, standing at 216,000 in the year to June 2018 and 224,000 in the year to June 2019.
It then dropped to an estimated 111,000 in the year to June 2020 when restrictions introduced during the pandemic limited travel and movement.
The total rose to 254,000 in the year to June 2021, followed by steep jumps to 634,000 in the year to June 2022 and 906,000 in the year to June 2023.
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Group A: Palmeiras, Porto, Al Ahly, Inter Miami.
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Group C: Bayern Munich, Auckland City, Boca Juniors, Benfica.
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UAE v Oman - abandoned
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At a glance
Global events: Much of the UK’s economic woes were blamed on “increased global uncertainty”, which can be interpreted as the economic impact of the Ukraine war and the uncertainty over Donald Trump’s tariffs.
Growth forecasts: Cut for 2025 from 2 per cent to 1 per cent. The OBR watchdog also estimated inflation will average 3.2 per cent this year
Welfare: Universal credit health element cut by 50 per cent and frozen for new claimants, building on cuts to the disability and incapacity bill set out earlier this month
Spending cuts: Overall day-to day-spending across government cut by £6.1bn in 2029-30
Tax evasion: Steps to crack down on tax evasion to raise “£6.5bn per year” for the public purse
Defence: New high-tech weaponry, upgrading HM Naval Base in Portsmouth
Housing: Housebuilding to reach its highest in 40 years, with planning reforms helping generate an extra £3.4bn for public finances
