RIYADH: A potential rise in oil output in the coming months means the Saudi economy is expected to witness its fastest growth in over a decade this year, according to Capital Economics.

“We think that the Saudi economy will grow by 10 percent in 2022 and 5.3 percent in 2023,” wrote James Swanston, an economist at Capital Economics.

Non-oil sector driving Saudi economy

According to the Capital Economics report, final gross domestic product figures for the fourth quarter of 2021 indicated that the Saudi economy grew by 3.2 percent in 2021. This growth was largely driven by the non-oil sector, which expanded 4.9 percent in 2021.

The report further noted that the non-oil sector has rebounded strongly since the omicron wave ended in January 2022.

“The S&P Global Composite PMI rose from 56.2 in February to a four-month high of 56.8 in March. The output component of the PMI rose to its highest level in over four years,” added Swanston.

Oil sector

According to the report, oil production rose to 10.3 million barrels per day in March, which translated into a growth of 26.7 percent year-on-year. It also marked the fastest pace recorded since 2003.

Capital Economics asserts that Saudi Arabia will raise oil output further — and probably by more than is currently pencilled in under the OPEC+ deal.

An increase in oil production may also give the government more scope to loosen fiscal policy and support the recovery in the non-oil sector, the report added.