#Saudi recovery remains weak; economy to grow at 2.3% this year | ZAWYA MENA Edition

Saudi recovery remains weak; economy to grow at 2.3% this year | ZAWYA MENA Edition

The slow start to the vaccine rollout in Saudi Arabia, tightening of COVID-19 restrictions and the kingdom’s voluntary oil output cuts in February and January have weighed on activity, said Capital Economics in a new report.

A sustained recovery will be delayed until at least till the middle of the year with the result that the Saudi economy is likely to grow by just 2.3 percent this year, noted James Swanston, MENA economist at the consultancy.

Point of sale transactions and ATM withdrawals figures, proxies for consumer spending, fell at their fastest pace since August in January. At the same time, growth in local deliveries of cement, an indicator of construction activity, slowed from 9.0 percent year-on-year (y-o-y) in December to 5.6 percent y-o-y in January.

On a more positive note, private sector credit growth picked up from 14 percent y-o-y at the end of last year to 14.4 percent y-o-y in January. And the whole economy PMI for January edged up from 57.0 in December to 57.1 as the forward-looking components of the survey turned more optimistic, the report said.