Outlook: Saudi Arabia's economic recovery will be gradual, with high uncertainty - NBK | ZAWYA MENA Edition
An economic recovery in Saudi Arabia is expected to be gradual with an elevated level of uncertainty and it may take until the second half of 2022 for all the lost private-sector output in 2020 to be recouped, National Bank of Kuwait (NBK) said in a report.
Like many other countries worldwide, GCC states too were hit hard due to shocks stemming from the impact of the coronavirus pandemic as well as its impact on the demand of oil.
Saudi Arabia's fiscal position came under pressure in H1 2020 as revenues dropped by 36 percent and spending decreased 8 percent resulting in a deficit of SAR 143 billion. The government dealt with its finances by tripling the VAT, increased customs, and discontinued the cost of living allowances.
“We forecast non-oil growth to drop by 2.6 percent in 2020 before rebounding to 2 percent in 2021 with GDP growth at -4.1 percent this year and +2.8 percent next year given that the oil sector should start supporting growth in 2021,” the report said.
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