Standard & Poor’s (S&P) Global expects Saudi Arabia’s economic growth to recover to 2.7 percent in 2024 from a contraction of 0.4 percent this year.
S&P stated in a report on emerging markets that growth in Saudi Arabia declined this year due to oil production cuts it implemented within OPEC+. However, the agency expects growth to improve in the next two years, reaching 3.7 percent in 2025.
It is noteworthy that Saudi Arabia has a rating of A with a stable outlook from the credit rating agency. Moreover, Moody’s expected non-oil gross domestic product (GDP) growth to be between 3 and 4 percent annually until 2030.
Saudi Arabia’s non-oil economy
S&P stated that this expected growth will push the non-oil economy to constitute about 56 percent of Saudi Arabia’s GDP.
Riyadh Capital estimates a 4.9 percent increase in Saudi non-oil activities in 2024. Hence, this positive forecast confirms Riyadh Capital’s confidence in the effectiveness of the economic policies Saudi Arabia has in place. Moreover, it expects the momentum of progress-driven initiatives to continue in 2024.
In addition, Saudi Arabia’s economic summary for the fourth quarter of 2023 outlines a strategic plan for economic recovery. It indicates a recovery after a period of contraction in 2023.
Non-oil activities drive growth
S&P forecasts a significant growth of 5.1 percent in Saudi Arabia’s non-oil activities in 2023. This increase is due to progress-led fiscal policy that places a strong emphasis on increasing investment spending. Moreover, Riyad Capital expects that this growth momentum will pave the way for stronger economic performance in the coming year.
Read: Saudi investment funds surpass one million participants milestone in Q3
Decrease in oil production
The economic slowdown seen in 2023 is due to the decline in oil production implemented over the past 12 months. Riyad Capital indicates that the stagnation phase is temporary. Therefore, it expects a gradual reversal of production cuts next year.
According to the analysis, Riyad Capital expects a noticeable recovery in the oil sector. It expects oil to contribute 3.6 percent of GDP in 2024. This reversal will play a pivotal role in driving the overall economic recovery.
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