#Saudi real GDP to return to pre-COVID-19 levels in 2022, says S&P | ZAWYA MENA Edition

Saudi real GDP to return to pre-COVID-19 levels in 2022, says S&P | ZAWYA MENA Edition

Saudi Arabia’s economy will recover from 2021 to 2022 on the back of higher oil demand and private consumption, ratings agency S&P Global said on Tuesday.

However, the real gross domestic product (GDP) will not return to 2019 levels until 2022, as the expiry of OPEC+ quotas and higher oil prices boost economic activity to nearly 3 percent, the agency said in its report, “Saudi Banking Sector 2021 Outlook”.

Credit growth, which picked up in 2020 based on stronger mortgage and lending for small and medium-sized enterprises (SMEs), is set to stay strong in nominal terms but will slow down due to high base effect from 2021 to 202

Corporate credit growth may pick up as public investment fund programs generate business for contractors. However, SME credit could slow, as the central bank’s deferral programs are wound down, the report said.

Cost of risk is also likely to stay elevated in 2021 at about 120 basis points. “This reflects our view that the volatile global health situation and international travel restrictions still weigh on the economy,” cited the report.