Economic Research

In-depth reports on key economic issues.

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    Mon, 08 February 2016

    The Saudi Economy in 2016

    The Saudi economy will continue to slow in 2016 as the private sector gradually adjusts to the new norm of fiscal deficits and lower spending announced by the government. As oil prices fall year-on-year in 2016, the fiscal deficit will remain in double digits, but the government will push to gradually diversify its revenue base and consolidate its spending. The most recent rise in domestic energy prices represents a trend towards a broader reform in domestic economic policymaking. We expect Saudi oil production in 2016 to remain unchanged, year-on-year, at 10.2 mbpd. Saudi Arabia’s current strategy of maintaining market share will result in lower levels of oil revenues in the short-term, but will benefit it in a few years’ time. Despite the lower level of spending outlined in the 2016 Saudi budget we expect the government to continue supporting economic activity despite the prevailing subdued oil price environment.

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    Tue, 26 January 2016

    Quarterly Oil Market Update (Q4-2015):Oil prices are going to be lower for longer

    The current period of low prices is set to remain throughout 2016, pulled down primarily as a result of persistently high oil supply. All-out competition between members of OPEC will be the main reason for continued oversupplied markets. We expect to see OPEC production rising by a further 500 thousand barrels per day (tbpd) by Q4 2016 year-on-year with most of the rises coming from increased Iranian supply. Meanwhile, recently downward revised global economic growth forecasts by the IMF point to moderate yearly growth in oil demand. All of these factors have led us to cut our full year 2016 Brent forecast to $33 per barrel (pb), from $47 pb previously, and 2017 forecast to $44 pb from 58 pb previously.

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    Wed, 30 December 2015

    2016 Saudi Budget

    The government’s budget for the 2016 fiscal year (31 December 2015 to 30 December 2016) was endorsed by the Council of Ministers on 28th December. It points to a sustained commitment in maintaining a high level of spending on the economy despite the continued environment of lower oil prices. The government has budgeted for a SR326 billion deficit in nominal terms, based on revenues of SR514 billion and expenditures of SR840 billion. The deficit will continue to be financed using a combination of Saudi Arabian Monetary Agency’s (SAMA) huge stock of net foreign assets, and domestic debt. 

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    Wed, 28 October 2015

    The impact of lower oil prices on shale oil- US Shale Oil at an Inflection Point

    US shale oil production continued to increase even as oil prices tumbled 50 percent but lower oil prices have begun to take their toll. Sustained drops in US oil production are expected as oil hedges expire, financing from secured lending is tightened and the high yield debt market becomes too expensive. Aside from shale oil, the lower oil price environment will also impact global oil supply but Saudi Arabia will be the main beneficiary when global oil markets become tighter and prices rebound by 2020.

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    Wed, 21 October 2015

    Quarterly Oil Market Update- Attention shifting from supply to demand.

    Brent Oil prices dropped by 18 percent quarter-on-quarter in Q3 2015 and averaged $50 per barrel. The market continues to witness a shift from supply to demand and no appreciable upside on oil prices is envisaged by this trend. The continued moderate pace of global economic growth will result in a 1.4 percent year-on-year global oil demand uplift with similar growth rates envisaged for 2016. 

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