Saudi Central Bank warns of damage to growth due to global slowdown

Economy and stock exchange

The Saudi Arabian Monetary Agency (SAMA) said the kingdom's economy is expected to improve in 2019, but the global economic slowdown and its possible impact on the world oil market could affect growth.

The Saudi economy grew by 2.2% in 2018, supported by the oil sector, compared to a decline of 0.7% in 2017, the report said.

The main threat to Saudi Arabia's economy is its exposure to the world oil market. The oil sector accounts for 45 percent of the kingdom's GDP and more than 63 percent of government revenues.

The report warned of signs of slowing global growth that has recently emerged, which may indirectly affect the Saudi economy.

He said structural reforms were likely to impose some pressure on short-term economic growth.

In April, the International Monetary Fund (IMF) predicted Saudi economic growth in 2019 would slightly increase its previous estimate of 1.8 percent, thanks to the growth of the non-oil sector at a faster pace than the broader economy.

The governor told Reuters in April that economic growth in 2019 "will not be less than 2%."

For the non-oil sector, the expansionary fiscal policy is expected to stimulate growth, with the 2019 budget showing a significant increase in capital spending by 245 billion Saudi riyals ($ 65.3 billion), the report said.

The non-oil sector achieved modest growth of 1.7 percent in 2018, up from 1 percent a year earlier, according to the Saudi central.

The central bank said the expected budget deficit was 136 billion Saudi riyals or 4.6 percent of GDP in 2018, compared with a deficit of 9.3 percent in the previous year. He added that government revenues grew to 895 billion riyals in 2018, up 30 percent from the previous year.

Non-oil revenues were 287 billion riyals, up 90 percent from the previous year, with more than half coming from tax revenues, while government spending increased 11 percent to 1 trillion riyals in 2018.

(tt) Saudi Arabia (t) Global slowdown (t) Economy (t) Economy (t) Saudi Arabia