Riyadh – Mubasher: The Saudi economy is achieving better growth, pushed up by increased public spending aimed at boosting the private sector and creating new jobs, while oil revenue remains at bay.

Thanks to higher tax revenue, the Saudi government’s revenue is improving, but lower oil prices and the sluggish pace of diversification, however, is posing risks to the economy, according to a report released on Tuesday by the National Bank of Kuwait (NBK).

“With oil prices last year at least 31% higher than they were in 2017, the government has unveiled another record budget in support of consumption, jobs, the private sector and economic diversification,” the report said.

The non-oil sector is expected to grow 3.2% by 2021, compared to 2% in 2018, while the growth of GDP at constant prices will slow to 1% in 2019 and stand at 2.4% in the years 2020 and 2021 due to the oil output cut, the NBK’s data showed.

“Inflation has been negative since the start of 2019, weighed down by falling real estate prices and housing rents as well as by base effects related to the 2018 subsidy cuts and VAT rollout,” the report revealed.

NBK expects that inflation of Saudi Arabia will rise to 0.8% in 2020, compared to -1.5% in 2019, resulted from hikes in the prices of energy and utility and additional tax on mooted sugary drinks.