Saudi investment bank Jadwa Investment has raised its growth forecast for Saudi Arabia this year after the kingdom's economy showed strong expansion in both oil and non-oil activities in the first half of 2022.
Gross domestic product of the Arab world's largest economy is now forecast at 8.7 per cent compared with a previous 7.7 per cent estimate after its expanded 3.2 per cent in 2021, Jadwa said in a new report.
The investment bank's estimate is higher than the International Monetary Fund's 7.6 per cent forecast for this year. The kingdom’s economy is set to grow at the quickest pace in a decade and could be one of the world’s fastest-growing economies this year, the IMF said in August.
Saudi Arabia’s economy grew 12.2 per cent in the second quarter, exceeding initial estimates and registering the fastest expansion since the third quarter of 2011. This was due to higher oil prices, data from the kingdom’s General Authority for Statistics showed earlier this month. The expansion followed the kingdom posting the strongest growth rate among the world's largest economies in the first quarter of this year.
Continued growth of non-oil exports combined with a rise in investments in manufacturing will provide additional support to the sector’s expansion, Jadwa said. More planned entertainment, leisure and sports events, in addition to the recently issued Hayya card that allows access to the kingdom for World Cup visitors in neighbouring Qatar, will spur growth.
Inflation in the kingdom rose by an average of 2.2 per cent during the year to August. This makes Saudi Arabia one of the G20 countries with the lowest levels of inflation. Inflation in the US and UK is at four-decade highs and at record levels in Europe.
The kingdom's transport, storage and communication sector expanded by 6.8 per cent year-on-year in the first of 2022 as most travel restrictions related to Covid-19 were lifted. This paved the way for a rebound across all of the sector's main segments.
Saudi Arabia Railways carried more than 2.3 million passengers in the first six months of the year. This was a 121 per cent increase from the same period last year, in addition to a 24 per cent jump in cargo transportation.
Growth of the sector is expected to continue in the second half of the year on higher inbound and outbound travel. Jadwa said this would also result from more programmes and projects being introduced under the National Transport and Logistics Strategy, which was announced in June 2021.
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