RIYADH: Saudi Arabia’s gross domestic product growth forecast for 2024 is now 4.6 percent, compared to a previous calculation of 3 percent, according to a Moody’s Investors Service report.
In a recent disclosure, the global credit agency forecasted a 0.5 percent GDP growth for 2023 while projecting an average annual growth rate of 3.2 percent over the next three years.
Moody’s indicated that the Kingdom’s credit strengths come from its robust government balance sheet, supported by large foreign currency buffers.
The report added that Saudi Arabia’s strong economy, high per-capita income, growing institutions, and government policy effectiveness play a significant role in its economic expansion.
“The positive outlook reflects the increasing likelihood that, through reforms and investment in various non-oil sectors, the sovereign’s economic and fiscal reliance on hydrocarbons will, over time, materially decline,” the report stated.
“Ultimately, this will not only reduce its exposure to oil price cycles and to a potential acceleration in global carbon transition but it will also diminish the pressure to support the kingdom’s implicit social contract through growth in public spending,” it added.
The US-based firm forecast that the non-hydrocarbon sector will substantially influence economic growth, contributing an annual average of 3.5 percentage points.
While advancement is anticipated, Moody’s also projected an average fiscal deficit for the Kingdom. It is expected to be around 2 percent of the gross domestic product in 2023-2024, with this deficit predicted to increase to 3.5 percent in 2025-2026.
Despite this contrasting with the fiscal surplus of 2.5 percent witnessed in 2022, this disparity stems from the rise in expenditure associated with Saudi Arabia’s ambitious economic diversification plan.
The agency’s forecast aligns with official data highlighting the Kingdom’s non-oil growth.
Saudi Arabia’s GDP grew 1.2 percent year-on-year in the second quarter of 2023, thanks to a 6.1 percent surge in the non-oil sector, according to a report by the General Authority for Statistics.
In March, Moody’s upgraded the Kingdom’s growth to 2.5 percent in 2023 from its previous forecast of 1.7 percent announced in November. For 2024, it raised the growth to 3 percent from the earlier forecast of 2.6 percent.
Source : ARABNEWS
