Minister of Finance Ibrahim Al-Assaf with a copy of Jadwa Investment report on Saudi economy at the Euromoney conference which was held in Riyadh recently.

The Saudi economy will continue with its strong performance in 2015, despite the lower oil prices as the nonoil private sector will record robust growth amid diversification of the national economy and the Saudi stock market (Tadawul) opening up to foreign investors.

This is highlighted in the annual report — Saudi Economy 2015 — prepared by Jadwa Investment, a closed joint stock company operating under the supervision of the Capital Market Authority (CMA).

The report says that the economy will do well with annual growth in the oil sector remaining positive in 2015, as average oil output is expected to increase on the back of higher domestic consumption, while the nonoil private sector will continue to record robust growth.

The report, a copy of which was made available to reporters, was released on the sidelines of the recently held 10th Euromoney conference.

According to the report, the oil sector is expected to remain almost unchanged in terms of growth. It is expected to grow by 1.6 percent in 2015, as against 1.7 percent in 2014, whereas oil production is expected to increase by 1.1 percent in 2015, compared to 0.5 percent in 2014 as the Kingdom will continue to satisfy its growing domestic energy consumption as well as maintain its share in the global oil market.

The report predicted the oil refining sector will grow by 10 percent, thus becoming the fastest growing sector in the Kingdom in 2015. The sector will benefit from significant additions to refining capacity.

It underlined that the nonoil private sector will continue to be the engine for growth in the economy, benefited by elevated government spending as well as corporate lending and solid domestic consumption.

The report states that the construction and utilities are likely to be the fastest growing sectors for the private stakeholders.

However, the report also has words of caution about significant slowdown in global growth; geopolitical tensions may constitute key risks and a sustained period of lower oil prices will lead to a higher than forecast fiscal deficit. Furthermore, regional political uncertainty will continue to cast a shadow over the economy and any heightened tension will hit businesses and consumer confidence.

Tariq Al-Sudairy, CEO and MD, Jadwa Investment, observed that the opening of the Saudi capital market will attract significant attention from international institutional investors drawn to its scale, profile and growth prospects.

“We expect to see several positive implications stemming from the entry of international investors into the local market, and the increased ratio of institutional to retail investors will enhance the depth of the market and moderate volatility by favoring long-term investment horizons over speculative trading,” he said.

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