RIYADH: Saudi Arabian economy, the biggest in the Arab world, is poised to grow by 1.6 per cent this year amid a rebound in oil prices and an easing of fiscal austerity, according to BMI Research.
Private sector activity, however, will regain traction at a slower pace as the introduction of VAT weighs on business confidence in the first half of the year.
“The Saudi economy will recover in 2018, as continued gains in oil prices support the government’s move towards a more expansionary fiscal policy in turn boosting consumption in the kingdom,” BMI Research said in a report.
“Beyond the short-term headwinds posed by the introduction of VAT, business activity will also strengthen.”
The research firm, a unit of Fitch Group, noted that government’s shift towards a more expansionary fiscal policy will be a key driver of growth over the coming quarters, boosting both government and private consumption.
BMI joins a number of research firms, rating agencies and economists forecasting increased growth for the kingdom’s economy.
S&P Global Ratings affirmed Saudi Arabia’s credit rating in April with a stable outlook on the expectation that economic growth will accelerate in 2018 as the world’s biggest oil exporter continues to boost spending.
