RIYADH: After 8 years of budget deficits, Saudi Arabia reported a SR90 billion ($24 billion) projected budget surplus for 2022, estimating a 7.5 percent GDP growth according to a Cabinet statement – an opportunity that sets the stage for stock market recovery.

Tadawul’s main and parallel indexes, TASI and Nomu, closed the pre-budget session in green territory, up 0.28 percent and 1.66 percent to 10,969.06 points and 23,986.86 points respectively.

“The current budget shows strong macro indicators that will enhance the confidence in economic growth and continuous reforms that are necessary to make the stock market more attractive to all investors to maintain positions,” Mazen Alsudairi, head of research at Al Rajhi Capital told Arab News.

“The economy growth next year is supported with 4 percent growth in non-oil activities and that’s also another driver for strong stock market performance, in addition to an expected increase in liquidity,” he added.  

The Kingdom’s budget picture for next year could have a big impact on investor sentiment amid uncertainty, potentially leading to a rally momentum for the Saudi bourse.

Actual budget figures in 2021 might also drive a healthier stock market. The stock market saw a recovery this year with many companies turning into profit after a slump in revenues and profitability in 2020.

For the current fiscal year, the Kingdom’s economy narrowed the budget deficit to SR85 billion from the initial estimate of SR145 billion made last year, thanks to the recovery of markets wounded by the wave of diminished economic growth and wrecked supply chains caused by the coronavirus pandemic.