Arab News, Wednesday, Oct 20, 2021 | Rabi Al-Awwal 13, 1443
Saudi economy to grow by 7.3% next year: Capital Economics
Saudi Arabia: Economic research firm
Capital Economics expects the Saudi economy to grow by 2.5 percent this year and
by an impressive 7.3 percent in 2022.
When compared to the firm’s pre-pandemic
estimates, the country’s GDP would be about 3 percent higher by the end of 2023.
William Jackson, Chief Emerging Market Economist
at CE, added: "This would make the Saudi economy one of the few in the world
where GDP will be above its pre-pandemic trend over the forecast period.”
The company predicts that higher oil output, along
with a less contractionary fiscal policy, would drive the economy’s recovery
next year.
Saudi inflation is also projected to edge a little
higher towards 1 percent by the end of this year and the first quarter of 2022.
Following this period, the rise in consumer prices
is expected to be in the 1-1.5 percent range. However, it could fall to a lower
level in case the VAT rate dropped, the company pointed out.
The new report also offered an outlook for the
whole region. Gulf countries’ economic recovery as a whole is expected to gain
momentum due to their strong vaccination rates and higher oil production.
In the UAE, rising oil output and the World Expo
are expected to fuel the economy’s growth.
Despite an expansion in economic activity driven
by rising gas output, Qatar’s rebound could prove to be weaker than other GCC
countries due to risks in the non-oil sector.
Meanwhile, Oman and Bahrain could face setbacks in
their recoveries as they grapple with contractionary fiscal policies and
mounting public debt.
In addition, Egypt’s recovery could gain pace in
the next quarters as the economy re-opens. However, a weak vaccination campaign
and a tight fiscal policy might hamper this trend.
The firm expects the country’s economy to grow by
4.8 percent and 5.8 percent in 2020 and 2021 respectively.