RIYADH: Saudi Arabia’s economic growth is expected to accelerate to 8.3 percent in 2022, according to a forecast by the World Bank.

In its report, the organization noted the economic growth of the Kingdom will be moderated to 3.7 and 2.3 percent in 2023 and 2024, respectively.

According to the World Bank, the oil sector will be the key driver of this economic growth with the output estimated to grow by 15.5 percent in 2022, while the non-oil sector is also expected to continue its growth trajectory estimated at 4.3 percent this year.

“The Saudi Arabian economy is on an accelerated growth path in 2022; driven by higher oil and non-oil activities as the oil sector strengthens and pandemic pressures fade,” wrote the World Bank in the report.

The report further noted that headline inflation is expected to stay subdued during 2022 and hover around 2.5 percent as a result of a stronger US dollar, subsidies and price controls, and stable rents.

It added that inflation is expected to average 2.3 percent in the medium term.

The World Bank projected that the budget balance will register a surplus of 6.8 percent of gross domestic product in 2022, the first surplus in nine years, driven by higher oil receipts.

The report pointed out that Saudi Arabia’s economic growth of 11 percent in the first half of 2022 was mainly driven by the oil sector, which registered a rapid 21.6 percent growth rate, while the non-oil sector in the Kingdom also witnessed a rise of six percent in the first half. 

According to the World Bank report, the direct impacts of a prolonged war in Ukraine on Saudi Arabia’s economy are limited due to weak trade and investment flows with Ukraine and Russia. 

The report, however, warned that further sanctions and disruptions to supply chains could adversely affect the Kingdom through slower-than-anticipated global growth and higher import prices. 

On the positive side, higher energy prices and output is expected to further strengthen the external and fiscal position of Saudi Arabia. 

On Oct. 4, S&P Global revealed that Saudi Arabia continues to maintain ongoing expansion in its non-oil economy as output and new orders recorded gains, leaving the Kingdom’s Purchasing Managers’ Index at 56.6 in September.

Earlier in October, Al-Rajhi Capital projected that Saudi Arabia’s real GDP would increase by nearly 8 percent year-on-year in 2022 and 3.1 percent year-on-year in 2023.

Inflation is expected to be 2.6 percent and 2.1 percent in 2022 and 2023 respectively, Al-Rajhi said.

In September, a report published in Economist Intelligence said that Saudi Arabia is expected to become the fastest growing economy in 2022, outpacing Asian giants like China, India, and other struggling economies in Western Europe and North America.

The Economist Intelligence report also projected that the GDP of the Kingdom is expected to reach 7.5 percent this year, the Kingdom’s fastest rate of growth since 2011.