Saudi government investment spending up in Q2, says report

Saudi government investment spending up in Q2, says report

Saudi Arabia expects the hydrocarbons GDP growth to be negatively impacted by production curbs in H2, but this is likely to be largely offset by resilient non-oil sector activity, which appears to be underpinned by government and GRE investment spending, according to leading UAE bank Emirates NBD.

Overall, a modest contraction is likely in the kingdom's headline GDP growth this year of -0.5%, stated the Emirati bank in its review.

According to Emirates NBD, the preliminary GDP for Q2 showed the oil and gas sector contracting by -4.2% year-on-year as the government implemented oil production cuts. However, overall non-oil sector GDP growth remained robust at 4.9% y/y in Q2.

The private non-oil sector expanded 5.5% y/y while government services growth slowed to 2.7% y/y from 4.9% in Q1 2023. Headline GDP growth came in at 1.1% y/y in Q2, it stated.

Saudi Arabia had recorded a budget deficit of -SR8.2 billion (-$2.2 billion) in H1 2023, compared with a surplus of SR135.4 billion ($36.1 billion) in H1 2022. Revenue too declined by -8.1% y/y in the first half, entirely due to lower oil revenues.

Non-oil revenues grew 10.8% y/y as taxes in income, profit and capital gains jumped 66%. Zakaat and investment income also grew