Saudi non-oil sector set for boost
Saudi Arabia’s non-oil sector is set for a further boost as the Kingdom’s economic reforms pay dividends and work begins on a raft of mega-projects, a report published Sunday found. Under the ambitious Vision 2030 plan, the country is looking to reduce its reliance on the energy industry and boost private sector business. Such reforms are paying off, with growth in the Kingdom’s non-oil sector set for an additional pick up going forward, according to a report by Bank of America Merrill Lynch.
Authorities ongoing fiscal reforms and possible one-off revenues are keeping non-oil revenues on track, wrote the bank’s regional economist Jean-Michel Saliba. Saliba said the $69 billion deal in which oil giant Saudi Aramco plans to acquire petrochemicals firm SABIC from the Public Investment Fund (PIF), could further boost the non-oil sector. The likely ramp-up in budget expenditures and, in particular, off-budget capital spending after the completion of the SABIC-Aramco-PIF deal, suggest non-oil activity is likely to pick up going forward, he wrote.
Growth in Saudi Arabia’s average non-oil GDP last year, compared with 1.3 percent in 2017.
The completion of the SABIC deal and the subsequent financial boost for PIF, Saudi Arabia’s sovereign wealth fund, could help kickstart many of the Kingdom’s planned mega-projects, the report added. That could boost growth in non-oil GDP by 2 percentage points “in the medium term” — which would be almost double the 2.1 percent rate at which non-oil GDP grew in 2018. — VoM