Non-oil GDP growth likely to remain at 2.7%— Expert

Despite a tighter budget in 2020, the IIF economists expect non-oil real GDP growth to remain solid at 2.7 per cent in 2020 driven by further recovery in private sector activity, which will be supported by interest rate cuts. Latest data showed the purchasing managers’ index (PMI) rose to 58.6 in November (the highest in four years), and point of sale transactions, a proxy for retail sales, continue to expand. Credit data also showed credit growth picked up to 3.5 per cent year on year in October 2019, with a recovery in lending for construction and manufacturing.

“We expect overall real GDP to shift from a contraction of 0.3 per cent in 2019 to a growth of 1.9 per cent in 2020, as crude oil production is projected to increase slightly. The contraction in 2019 is mainly due to the decline in crude oil production of 4.5 per cent in the context of Opec+ agreement and the September attack on Aramco’s oil facilities,” said Garbis Iradian, chief economist for Middle East and North Africa at IIF.