LONDON - Stronger oil prices could cut the Saudi budget deficit by as much as 28 percent this year according to a report from a top brokerage.

Al-Rajhi Capital expects oil revenues to reach SR134 billion ($35.7 billion) in the second quarter and some SR547.5 billion for the full year.

Oil traded down below $74 yesterday amid concerns that a trade row between the US and China could dampen global demand for oil.

“Overall, we continue to believe that higher oil output amid firm oil prices, along with improving non-oil sector will ensure a sustainable economic recovery in 2018,” said Al-Rajhi in a repor

Last month the IMF increased its growth forecast for the Kingdom to 1.9 percent from 1.7 percent because of a stronger oil price.

But while foreign reserves are also inching up, the economy faces other headwinds with credit to the private sector weakening in June.

Real estate prices also fell by about 1.5 percent in the second-quarter compared to a year earlier.

To help spur investment in much need infrastructure, the Saudi authorities have drafted legislation on public-private partnerships which could support a rebound in the construction sector which remains under pressure.

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