Riyad Capital estimates a 4.9 percent boost in Saudi’s non-oil activities in 2024. This positive projection underscores the firm’s confidence in the efficacy of the economic policies in place. It expects that the momentum of progress-driven initiatives will proceed in 2024.
Additionally, its Saudi Economic Chartbook for the fourth quarter of 2023 outlines a strategic plan for economic recovery. It signals a rebound after a period of consolidation in 2023.
Non-oil activities drive growth
The analysis projects a substantial 5.1 percent growth in non-oil activities in 2023. This surge is attributed to a progress-driven financial policy that places a strong emphasis on increased investment spending. Hence, Riyad Capital anticipates that this growth momentum will set the stage for a more robust economic performance in the year to come.
Oil sector reversal
The economic slowdown experienced in 2023 is attributed to oil production cuts implemented over the past 12 months. Riyad Capital highlights that the consolidation phase is temporary. Thus, it expects a gradual reversal to commence in the coming year.
According to the analysis, Riyad Capital predicts a notable rebound in the oil sector. It expects oil to contribute 3.6 percent of the GDP in 2024. This reversal will play a pivotal role in propelling the overall economic recovery.
Read: Steady growth continues: Qatar’s GDP reaches $46.7 bn in Q2
Fiscal deficit: A balancing act
For the fiscal year 2023, Riyad Capital estimates a fiscal deficit of SAR82 billion ($21.9 billion). That is equivalent to 2.1 percent of the GDP. This deficit is a result of the economic adjustments made during the consolidation phase.
However, it anticipates a significant improvement in the fiscal landscape for 2024. It projects the deficit narrowing to SAR43 billion or 1.1 percent of GDP. This positive shift is primarily attributed to expected increases in both oil and non-oil revenues. Thus, 2024 marks a gradual return to a more balanced fiscal scenario.
As Saudi Arabia navigates the challenges posed by oil production cuts and economic consolidation, Riyad Capital’s analysis provides a comprehensive roadmap for a resurgence in 2024. The kingdom is focusing on non-oil activities, strategic investment spending, and a gradual recovery in the oil sector. Therefore, its prospects to regain its economic momentum in the coming year look promising.
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