Saudi Arabia’s Economy: Recovery, Growth, and Stability Predicted
According to Deutsche Bank, Saudi Arabia’s economy is poised to rebound in 2024, with a projected growth of 3.3%, recovering from a contraction of -0.8% in 2023. Despite lingering effects from oil production cuts, positive factors like increased expat entries and an improved labor market are expected to bolster domestic demand. Non-oil activity, growing at 4% in 2023, will continue to thrive, driven by government initiatives such as giga-projects aimed at economic diversification.
Significant investments, both public and private, including the government’s focus on tourism and PIF’s ventures in semiconductor and space industries, are set to fuel growth. While the oil sector remains a cornerstone of the economy, risks like potential production cut unwinding and excess capacity persist. However, Saudi Arabia’s position in the global energy transition is expected to strengthen due to its cost-efficient and low-carbon production methods.
Geopolitical risks are a primary concern, although the threat of Red Sea spillover is mitigated as Saudi vessels aren’t targeted by the Houthis. Inflation is forecasted to remain low at around 2%, aided by stable food and commodity prices and the implementation of local gasoline price caps as per the Royal Directive.