Baku, Azerbaijan, Oct.31
By Leman Zeynalova – Trend:
Saudi Arabia’s economy picked up in August on the back of rising oil output, UK-based Capital Economics consulting company said in its report obtained by Trend.
“And while the threat of the US imposing sanctions on the Kingdom has clouded the outlook, we still expect the economy to strengthen further over the rest of this year and into the first half of 2019,” said the company.
Saudi economy continued to gather pace in Q3. It points to growth picking up to around 3 percent y/y in August, which would be the best performance since late-2015, according to the report.
The breakdown of the data shows that the pick-up in growth was fuelled by rising oil output, said the company.
“As looming sanctions have threatened oil supplies from Iran, Saudi Arabia has ramped up production in an effort to prevent global supply shortages. The threat of sanctions by the US has weighed on local financial markets but the country’s strong balance sheet means that the dollar peg will remain intact,” the company said.
And while some companies might delay investment plans, fiscal policy will continue to hold sway over the performance of the non-oil sector, according to Capital Economics.
“We think that the fiscal stance will remain accommodative in 2019 which, combined with rising oil output, will cause GDP growth to accelerate over the coming quarters. But a sharp slowdown is likely from the middle of next year,” said the report.
Saudi Arabia’s Energy Minister Khalid A. Al-Falih earlier said that the country’s daily oil output for October stands at 10.7 million barrels. He noted that in the case of necessity, this figure can reach 12 million barrels per day.
The minister pointed out that the uncertainty with regard to world oil supply still continues. The sanctions to be imposed on Iran starting from Nov.4 and the supply cuts from some other countries also contribute to this uncertainly, according to Al-Falih. Therefore, the minister believes it is not ruled out that oil prices can surpass $100 per barrel in 2019.
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