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Saudi finance minister sees weaker 2019 GDP growth due to OPEC-led cuts

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will be significantly less than the kingdom had expected because of OPEC-led oil output cuts, but the attack on Aramco had “zero” impact on revenue, the country’s finance minister said on Wednesday.

“Total GDP is going to be significantly less than what we have forecasted,” Mohammed al-Jadaan told Reuters in an interview in Riyadh, referring to internal estimates.

Jadaan said the oil-driven GDP is influenced by Saudi Arabia’s lower petroleum output in the wake of an OPEC-led supply deal to support oil markets.

He did not give any projections for 2019 GDP growth in the Arab world’s largest economy, but the International Monetary Fund has said it could grow 1.9 per cent in 2019, slower than 2.2 per cent in 2018.

The Saudi central bank had said earlier this year the economy will grow no less than 2 per cent in 2019.

Economists have said the kingdom may have to revise down economic growth estimates due to lower crude output, with some forecasting a contraction this year in the world’s biggest oil exporter.

Oil prices surged earlier this week after an attack on Saudi Arabia’s oil facilities on Saturday knocked out more than 5 per cent of global oil supply, but prices began to ease on Tuesday after Saudi Arabia said it would restore production lost by the end of the month.

Jadaan said Aramco continues to supply oil to the markets without interruption, which meant there is no interruption to oil revenue.

“Our focus is on non-oil GDP, that’s where diversification is,” he said, saying non-oil GDP is expected to grow at 2.9 per cent in 2019.

He said royalties and taxes are expected to be same from Aramco this year.

Jadaan also said Saudi Arabia is likely to issue dollar-denominated sukuk, depending on market conditions.

He said the Aramco IPO is moving ahead as planned and will most likely happen over the next 12 months.

Aramco’s primary listing will be on Tadawul in Riyadh, but the government is still considering a secondary listing overseas, he said. (Reuters/)
AOM/AFA

Edited by Abdullahi Mohammed/Felix Ajide

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