Economic Research

In-depth reports on key economic issues.

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    Mon, 26 September 2016

    International Trade and Investment Outlook

    Structural reforms announced in both the Vision 2030 and the National Transformation Program (NTP 2020) will have major implications on the Kingdom’s trade and financial flows, with a dramatic shift in the balance of payments over the next fifteen years. This report highlights how the implementation of reforms stipulated in both programs will move the economy away from oil, whilst, simultaneously, contributing to a competitive and productive private sector, which will attract foreign capital and contribute to further knowledge exchange, investment, and employment.

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    Mon, 29 August 2016

    Inflation Update- July 2016: (Inflation continues to slow)

    The General Authority for Statistics (GAS) has released Consumer Price Index data for July, showing a deceleration in prices to 3.8 percent year-on-year compared to 4.1 percent in June. Food inflation turned negative for the first time since January 2010, while housing remained as the main contributor to overall inflation during July.

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    Wed, 29 June 2016

    Temporary Outages Helping Balance Oil Markets

    Brent oil prices surged to an average of $45 per barrel (pb) in Q2 2016, up 35 percent quarter-on-quarter, due to a combination of developments. Firstly, oil outages from Canada and Nigeria resulted in at least 1.5 mbpd being temporarily unavailable to global oil markets. Secondly, slowing US shale oil output resulted in year-on-year growth in US crude oil imports being consistently positive for the first time in six years. ‘Brexit’ had a relatively modest impact on oil markets, with Brent slipping back slightly below $50pb immediately following the UK’s decision to leave the European Union. The effects over the longer term are less clear, with a worse-case scenario being a global contagion effect resulting in increased volatility in global oil and financial markets. 

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    Tue, 21 June 2016

    Recovery in Oil Prices: Rebound in US Shale Oil?

    During Q1 2016, US oil production saw its first year-on-year decline in eight years and this decline is expected to continue throughout the remainder of 2016. Despite this, the recently observed uptick in oil prices presents shale oil companies with a potential life-line. Not only does it raise the possibility of hedges being taken out again, an increasing number of shale oil companies are restructuring under chapter 11 bankruptcies, thereby prolonging oil production. Concurrently, the number of drilled uncompleted wells (DUCs), all of which can be brought on-line relatively quickly, have risen in recent months. All of these developments mean that even as current oil and financial indicators point to declining production in the next two years, production could turn out to be better than expected.

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    Thu, 16 June 2016

    National Transformation Program (NTP) 2020: The Kingdom's Path to Sustainable Economic Development

    The Council of Ministers approved the Kingdom’s National Transformation Program (NTP 2020) on June 6th 2016, with it ushering in a major new policy era designed to overhaul the economy. The program branches out directly from the Vision 2030 announcement back in April, and includes major overhauls to the economy. In this report, we attempt to assess the most relevant economic initiatives specified within the NTP, and try to present the likely trends and potential impact on the economy. We have also revised some of our macroeconomic forecast for 2016 and 2017, including our oil, fiscal, external, and GDP outlook.

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