Saudi Arabia | Country Economic Forecast

Q4 GDP data for Saudi Arabia showed a 3.8% y/y fall, taking the full-year 2020 outturn to -4.1%, broadly in line with our forecast. Compared with the 7.0% y/y fall in Q2 2020, the Q4 result is in line with the signs of recovery in the non-oil sector in H2 last year. The PMI shows steady expansion in early 2021 despite falling to 53.9 in February but, with the 1mb/d oil output cut extended into April, we have cut our 2021 GDP growth forecast to 1.6% from 1.9% last month. A stronger pick-up to 4.4% growth is seen in 2022 as the impact of higher oil prices feeds through.

What you will learn about:

  • Growth in the non-oil sector will be helped by the lifting of restrictions in early-March. 
  • Brent crude jumped above $70pb after a drone attack on Aramco facilities on 7 March. The risk of repeated attacks on Saudi oil facilities could see oil prices rise, but previous attacks have shown that Saudi oil production can bounce back quickly.
  • The March meeting for OPEC+ saw agreement for largely steady oil production, with Saudi Arabia extending its voluntary 1m b/d extra production cut into April. Overall, we expect Saudi output of 9m b/d in 2021, with Brent crude averaging almost $62pb.

Topics: GDP, Country Insight, MENA, Oil production, Saudi Arabia, Country Economic Forecast

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