Saudi's non-oil economy set to boom
Saudi's non-oil economy set for robust growth
Saudi Arabia's non-oil economy is expected to witness robust growth of 7.5 per cent in 2012 on the back of continued high government expenditure and increased domestic demand, said a new report.
The approval of the long-awaited mortgage law will transform the stagnant mortgage market, said the Citi Research report "Prospects".
However, it said some caution is merited given the likely challenges a surge in housing demand could introduce.
The report upgraded its growth projections for Dubai, mainly on the back of a reassessment of the growth prospects in the construction and real estate sectors.
Dubai has seen a steady recovery in the property market through the year, with villa prices rising by over 20 per cent YoY in the first half of 2012, according to research by Jones Lang Lasalle, the property services company.
While the recovery is mainly in the prime market, there is strong anecdotal evidence of an increase in general construction activity in the Emirate, with stalled projects being completed and new projects being announced, said the report.
"While we had previously expected a continued contraction of the construction and real estate sectors in 2012, we now expect modest growth of 2 per cent-3 per cent in real terms, with the net effect of lifting overall real GDP growth to 5.1 per cent in 2012 (previously 1.9 per cent)," the Citi report said.
Meanwhile, it said next year (2013) will be another year of modest global growth, with sizeable divergences between regions and countries.
It predicted a global growth of 2.6 per cent in 2013 and 3.1 per cent in 2014 (at current exchange rates), a little below consensus and IMF forecasts, after 2.5 per cent grwoth in 2012.
Nevertheless, it expects faster expansion subsequently, with global growth of 3½ per cent-4 per ent YoY in 2015-17. Major central banks probably will keep policy loose near term, with tightening not until 2015 in the US and rather later in Europe and Japan, it said.
China’s economy is transitioning to a slower growth path of about 7 per cent per year, with more emphasis on consumer spending. Even so, China will remain a global powerhouse, directly accounting for about a third of global growth in 2013-17.
In 2013, investment spending in China will probably exceed investment in the US and euro area combined. But, in coming years, the global expansion will become more broad-based across countries and economic sectors, with rapid growth in consumer spending and investment across many other emerging markets as well.
Moreover, provided fiscal tightening is not abrupt, US growth is likely to rise to 3 per cent from late 2013 as constraints from weak balance sheets and poor credit availability ease. The euro area and UK economies will remain weak in 2013 and beyond, it said.