The non-oil economy should grow a solid 5% this year, Mubasher reports citing a note by Capital Economics. This will be fuelled by increased investments by the Public Investment Fund, which plans to ramp up annual deployment capacity to USD 70 bn a year starting 2026. Meanwhile, GDP is forecasted to expand at a 2.8% clip in 2024.

Inflation is set to rise slightly in the second half of the year to reach a peak of a little over 2% on an annual basis, Capital Economics said, adding that price pressures would still remain relatively low. Inflation inched up to 1.8% y-o-y in February 2024, marking a second consecutive monthly rise after January’s reading interrupted a seven-month downward trend

A key risk: Capital Economics warned of a major risk to the economy in case of a sudden plunge in oil prices under USD 70 a barrel. This would push the government to turn towards fiscal austerity instead of withdrawing from foreign reserves to alleviate pressure on the local currency’s peg to the greenback.

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