{"id":82328,"date":"2023-11-27T00:00:00","date_gmt":"2023-11-27T00:00:00","guid":{"rendered":"https:\/\/enterpriseam.com\/ksa\/2023\/11\/27\/the-economy-is-set-to-contract-this-year-on-lower-oil-output-but-the-private-sector-boom-continues-world-bank\/"},"modified":"2023-11-27T00:00:00","modified_gmt":"2023-11-27T00:00:00","slug":"the-economy-is-set-to-contract-this-year-on-lower-oil-output-but-the-private-sector-boom-continues-world-bank","status":"publish","type":"post","link":"https:\/\/enterpriseam.com\/ksa\/2023\/11\/27\/the-economy-is-set-to-contract-this-year-on-lower-oil-output-but-the-private-sector-boom-continues-world-bank\/","title":{"rendered":"The economy is set to contract this year on lower oil output, but the private sector boom continues \u2013World Bank"},"content":{"rendered":"<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"> <strong>The economy is set to shrink for the <\/strong><strong>first time<\/strong><strong> on an annual basis since covid<\/strong>, with the Kingdom\u2019s GDP is expected to contract by 0.5% y-o-y this calendar year compared to 8.7% growth in 2022. The culprit? Voluntary oil cuts of 1 mn bpd from July until the end of the year, according to the World Bank\u2019s latest <a target=\"_blank\" href=\"https:\/\/ent.news\/2023\/11\/1272.pdf\" style=\"\" rel=\"noopener\">Gulf Economic Update (pdf)<\/a>, out last week. The multilateral lender sees an 8.4% y-o-y contraction in oil activity in 2023 \u2014 the sector grew 15.5% in 2022. <\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>The third quarter saw the sharpest contraction since 2020 <\/strong>as the economy contracted 4.5% y-o-y, down from 8.6% growth in the previous year on the back of a 17.3% decline in oil activities according to figures from the <a target=\"_blank\" href=\"https:\/\/ent.news\/2023\/11\/1297.pdf\" style=\"\" rel=\"noopener\">General Authority for Statistics (pdf)<\/a>. <\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>PRIVATE SECTOR BOOM CONTINUES-<\/strong><\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>But the non-oil economy is still roaring, thank you: <\/strong>Non-oil GDP will grow at a 4.3% y-o-y clip this year on the back of \u201clooser fiscal policy, robust private consumption, and public investment drive,\u201d cushioning the anticipated downturn, the World Bank writes.<\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>And that squares nicely with what businesses are reporting: <\/strong>The Riyadh Bank Saudi purchasing managers\u2019 index (PMI) rose for the <a target=\"_blank\" href=\"https:\/\/www.pmi.spglobal.com\/Public\/Home\/PressRelease\/79456df20bd149128b7596df5959743d\" style=\"\" rel=\"noopener\">second consecutive month<\/a> to 58.4 in October, up from 57.2 in September on the back of new business orders, leading to a nine-year high in employment growth. It was the highest reading since June of this year. <\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>DEFICIT SPENDING-<\/strong><\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>Reversing a 2022 surplus: <\/strong>The economy hit an SAR 44 bn deficit in 9M 2023 with SAR 854 bn in revenues and SAR 898.3 in expenditure according to the <a target=\"_blank\" href=\"https:\/\/ent.news\/2023\/11\/1380.pdf\" style=\"\" rel=\"noopener\">Finance Ministry figures (<\/a><a target=\"_blank\" href=\"https:\/\/ent.news\/2023\/11\/1380.pdf\" style=\"\" rel=\"noopener\">pdf<\/a><a target=\"_blank\" href=\"https:\/\/ent.news\/2023\/11\/1380.pdf\" style=\"\" rel=\"noopener\">)<\/a>. Most of that figure accumulated in 3Q 2023 (SAR 35.8 bn) on the back of lower oil receipts. <\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>The gov\u2019t has reportedly taken on a USD 11 bn in syndicated facility to help finance the <\/strong><strong>budget deficit<\/strong>, <a target=\"_blank\" href=\"https:\/\/www.bloomberg.com\/news\/articles\/2023-11-23\/saudi-arabia-gets-11-billion-loan-to-help-fund-budget-deficit\" style=\"\" rel=\"noopener\">Bloomberg<\/a> reports, citing unnamed sources it says are familiar with the matter. The 10-year loan was covered by 18 banks, according to the sources. Information about the debt-instrument, pricing, and participating banks was not public.<\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>BETTER TIMES AHEAD- <\/strong><\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>Bouncing back in 2024:<\/strong>While we are expected to be the only economy in the Gulf Cooperation Council to see the economy contract this year, GDP should grow 4.1% y-o-y in 2024 \u2014 putting os on track to lead he GCC in growth next year. The World Bank sees the UAE coming in as the second-fastest growing with at 3.7% next year.<\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>SLOWER REGIONAL GROWTH-<\/strong><\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>The GCC economy as a while is shifting to a lower gear this year<\/strong>, with the economy expected to contract 1% y-o-y before growing 3.6% in 2024 and 3.7% in 2025. Still, the region\u2019s private sector will grow at a 3.9% clip this year. <\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>Israel\u2019s war in Gaza provides downside risk: <\/strong>\u201cThe current conflict in the Middle East poses significant risks to the region and the GCC outlook, especially if it extends or involves other regional players. As a result, global oil markets are already witnessing higher volatility,\u201d <a target=\"_blank\" href=\"https:\/\/tinyurl.com\/32z3zht6\" style=\"\" rel=\"noopener\">said<\/a> World Bank Country Director for the GCC Safaa El Kogali.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The economy is set to shrink for the first time on an annual basis since covid, with the Kingdom\u2019s GDP is expected to contract by 0.5% y-o-y this calendar year compared to 8.7% growth in 2022. The culprit? Voluntary oil cuts of 1 mn bpd from July until the end of the year, according to [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":82329,"comment_status":"","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"newspack_ads_suppress_ads":false,"newspack_popups_has_disabled_popups":false,"newspack_sponsor_sponsorship_scope":"","newspack_sponsor_native_byline_display":"inherit","newspack_sponsor_native_category_display":"inherit","newspack_sponsor_underwriter_style":"inherit","newspack_sponsor_underwriter_placement":"inherit","ep_exclude_from_search":false,"_primary_brand":0,"newspack_featured_image_position":"","newspack_post_subtitle":"","newspack_article_summary_title":"Overview:","newspack_article_summary":"","newspack_hide_updated_date":false,"newspack_show_updated_date":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[2571],"tags":[27,2425,10,443,442],"brand":[],"newspack_spnsrs_tax":[],"class_list":["post-82328","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-economy","tag-economy","tag-energy","tag-enterpriseam-ksa","tag-gulf-cooperation-council","tag-world-bank","wpautop","entry"],"acf":{"mongo_id":"56a44f1b-d7f1-4975-9294-d735613c0fe2","order":"0","is_powered_by":false,"story_type":"1","photo_url":"https:\/\/ent.news\/2023\/11\/1280.jpg","photo_position":"above","homepage_title":"","full_issue_title":"Saudi economy is set to contract in 2023 on lower oil output, but the private sector boom continues \u2013World Bank","related_issue":[82325],"teaser":"","voice_url":"https:\/\/s3.us-east-1.amazonaws.com\/ent.news\/audio\/2024\/1\/.f5c1ea8b-afc3-4baa-934f-a6a3b0624848.mp3"},"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v27.1 (Yoast SEO v27.1.1) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>The economy is set to contract this year on lower oil output, but the private sector boom continues \u2013World Bank - KSA<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/enterpriseam.com\/ksa\/2023\/11\/27\/the-economy-is-set-to-contract-this-year-on-lower-oil-output-but-the-private-sector-boom-continues-world-bank\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"The economy is set to contract this year on lower oil output, but the private sector boom continues \u2013World Bank\" \/>\n<meta property=\"og:description\" content=\"The economy is set to shrink for the first time on an annual basis since covid, with the Kingdom\u2019s GDP is expected to contract by 0.5% y-o-y this calendar year compared to 8.7% growth in 2022. 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