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Saudi GDP growth is expected to fall to 2.5% in 2015 from 3.7% in 2014, mainly due to an anticipated contraction in the oil sector by 0.6%, Jadwa Investment said in its latest update on the Saudi economy. Oil revenue will decline in 2015, but the refining sector will grow by 10%, making it the fastest growing sector in the kingdom in 2015.
The non-oil private sector will continue to be the engine of growth, rising by 5.3%, as it benefits from elevated government spending, as well as corporate lending and solid domestic consumption.
The economy will continue to be driven by an expansionary fiscal policy, with Jadwa predicting that the budgeted fiscal deficit of SR145bn ($38.7bn) will be exceeded to reach around 6% of GDP, as spending rises above the budget figure of SR860bn ($229.3bn). Lower-than-expected oil prices would also cause a deficit blow-out. A significant slowdown to global growth and regional geopolitical tensions also present risks.
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