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Saudi economy forecast to continue slowdown in 2017

Saudi Arabia’s economy is forecast to continue slowing this year, dragged down by negative growth in the oil sector, according to Jadwa Investment.

Its latest report said growth in the oil sector will turn negative due to the kingdom’s compliance with OPEC production cuts, while non-oil sector growth should rebound but “remain subdued” during 2017.

Jadwa forecast that growth in the non-oil private sector will accelerate from 25-year lows with non-oil mining and ownership of homes likely to be the fastest growing sectors.

It added that growth in wholesale and retail and construction will turn positive following a recession in 2016.

Jadwa said that the combination of a rebound in oil revenue as a result of higher oil prices, rising non-oil revenue, and improving efficiency in expenditure will result in the fiscal deficit falling to single digits in 2017.

The current account deficit will also shrink considerably, boosted by a rise in oil export revenue, it noted.

“The main risks to our forecast stems from the external environment, specifically, any delays in the implementing reforms in the most growth-enhancing areas of the National Transformation Program,” the report said.

Jadwa added that the partial impact of fiscal balancing measures will be offset by the government’s focus on restructuring the private sector support mechanism.

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