Government data showed that the Saudi economy grew in the first quarter of the year at a pace that exceeded expectations, amid a less than expected impact of low oil prices.
Prosperous gross domestic product 3.4% on an annual basis in the first quarter, exceeding initial estimates issued by the General Authority for Statistics in May, she expected 2.7%.
“This amendment is due to a lower annual shrinkage in the oil sector and stronger growth in the private sector,” said Monica Malik, chief economist at Abu Dhabi Bank, Monica Malik.
Oil activities shrink 0.5%, while preliminary estimates indicated 1.4%shrinkage.
Non -oil activities have achieved a growth of 4.9%, while preliminary estimates expected 4.2%.
The Kingdom’s increase united its oil production from the impact of the decrease in crude prices during the first months of the year.
Disability
The financial deficit facing the Kingdom increases, as it indicates International Monetary Fund Until Riyadh It needs an oil price of more than $ 90 a barrel to achieve balance in its budget, compared to prices of about $ 60 a barrel in the past few weeks.
Early this month, Saudi Arabia, the world’s largest oil exporter, reduced its prices for buyers in Asia for the month of July, after the Organization of Petroleum Exporting Countries raised (OPECAnd its allies, known as the name OPEC PlusProduction targets for the fourth month in a row.
OPEC Plus agreed to a new increase in production equivalent to 411 thousand barrels per day in July, after production increased in the same quantity in May and June.
The Kingdom adopts a high -cost economic plan known as Vision 2030 aimed at reducing the economy’s dependence on oil, and pumped billions of dollars in huge new development projects.
In May, the Financial Times quoted Saudi Finance Minister Mohammed Al -Jadaan as saying that the Kingdom would evaluate the priorities of spending against the backdrop of the significant decline in oil revenues.
Spending
“We expect to witness some decline in government spending to limit the expansion of the financial deficit, which is likely to negatively affect non -oil growth,” Monica Malik said.
The analyst at Emirates NBD, Daniel Richards said that the bank still believes that spending will remain high.
“There is still sufficient spending on the projects that are still under implementation, which ensures the continued support of growth during the current and next two years,” he wrote in a note.
Saudi Arabia is scheduled to host many major international events that require a lot of spending on construction.
These activities include the 2029 Asian Winter Games, which are scheduled to include snow, a fresh, artificial water, and championship World Cup 2034, 11 new stadiums are expected to host their matches, in addition to renewing other stadiums.
It is expected that the Kingdom’s financial deficit at the end of this year will reach about 101 billion riyals (27 billion dollars).