Report: Saudi economy braces for trillion dollar threshold due to oil

Forbes reported that the Saudi economy has rebounded this year due to high oil prices caused by the war in Ukraine, bringing the kingdom closer to a trillion-dollar economy.

The IMF predicts that Saudi Arabia’s economy will grow by 7.6 percent for the year as a whole, bringing Saudi Arabia’s gross domestic product to $1,040 billion, noting that there are 18 countries whose gross domestic product will exceed $1 trillion in 2021.

In first place is the US with a $23 trillion economy, second is China with $17.5 trillion, and third is Japan with $4.9 trillion. Saudi Arabia ranked nineteenth among the largest economies last year, but it was still far from the trillion dollar threshold with a gross domestic product of $834 billion.

According to the US Energy Information Administration, the average price of a barrel of Brent oil – the main international standard – is expected to exceed $104 this year, compared to $70.89 in 2021 and just $41.69 in 2020.

On July 31, government data showed that the Saudi economy grew 11.8% year on year in the second quarter, with the oil sector up 23.1% and the non-oil sector up 5.4%.

Thanks to higher oil prices due to the war in Ukraine, Riyadh posted a budget surplus of 77.9 billion rials ($20.8 billion) in the second quarter of this year, with oil revenues up almost 90 percent in on an annualized basis.

“We expect the (Saudi) budget to record a surplus of 10.4% of GDP this year after nearly a decade of budget deficits,” the Dubai-based Emirates NBD said in a note on Aug. 5.

Source: Forbes

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