Macroeconomic reports

Macroeconomic report

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    Thu, 20 July 2017

    Macroeconomic update- June 2017: (Mild improvements in the Saudi economy, but risks remain)

    We have revised our 2017 forecasts to take into account the recent set of oil production and economic data. We forecast overall GDP growth to be 0.1 percent in 2017 (compared to 1.4 percent in 2016) due to a sharp decline in oil sector GDP, by -1.2 percent (compared to 3.4 percent in 2016). More positively, we forecast non-oil GDP to reach 1 percent during the same period (compared to 0.2 percent in 2016).

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    Mon, 27 February 2017

    Fiscal Balance Program 2020: The Path to Fiscal Sustainability

     Along with the 2017 budget statement, the government announced details of the Fiscal Balance Program (FBP 2020), one of the programs highlighted in Vision 2030. The FBP contains all reforms relevant to reaching a balanced budget by 2020 and includes initiatives designated for enhancing spending efficiency, reforming energy prices, and promoting non-oil revenue. The FBP also touches on critical socioeconomic aspects, such as the creation of a “Household Allowance Program”, and the announcement of more detailed plans to support private sector economic activity.

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    Sun, 12 February 2017

    The Saudi Economy in 2017

    We expect the Saudi economy to continue slowing in 2017, dragged down by negative growth in the oil sector. Non-oil sector growth should rebound but remain subdued. As oil prices rebound, the current account deficit will shrink considerably, while the fiscal deficit will fall to single digits. We believe the government will continue to comply with targets specified in the Fiscal Balance Program (FBP 2020), allowing for a smooth adjustment in the fiscal budget while cushioning the impact on growth in the non-oil private sector.

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    Thu, 24 November 2016

    Macroeconomic update- November 2016: (Reform of the Saudi economy begins to take shape)

    Since the start of 2016, and in line with targets specified in the National Transformation Program (NTP 2020), prudent policies to reform the fiscal budget have been taken, with their impact on economic performance starting to take shape. We have therefore revised some of our 2016 and 2017 forecasts to take into account this recent set of reforms.

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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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    Mon, 14 September 2015

    Econ update- September 2015

    In this report, we have revised our 2015 and 2016 forecasts to take account of a recent flow of data that has generally been slightly weaker than we had anticipated. We forecast real GDP growth to reach 3.2 percent, and 2.3 percent in 2015 and 2016 respectively, down from 3.5 percent in 2014. The high level of spending on the economy, together with low oil prices, will mean a larger than anticipated fiscal deficit, while the current account deficit will be small in 2015. However, the new government deficit financing strategy of reserve withdrawals and debt issuance will ensure a stable and gradual consolidation in public expenditure as the fiscal balance starts to improve from 2016.

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    Sun, 11 January 2015

    The Saudi Economy in 2015

    We expect that the economy will continue performing strongly in 2015, albeit at a slower pace than in the previous few years. Lower oil production will drag down overall GDP growth to 2.5 percent while the non-oil private sector will continue to record robust growth, at 5.3 percent. The decline in oil prices will mean a narrowing current account surplus and a larger-than-budgeted fiscal deficit.

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    Tue, 12 August 2014

    Macroeconomic update: Economic projections for 2014 revised up

    We have revised some of our 2014 forecasts to take account of a recent flow of data that has generally been stronger than we had anticipated. With higher than expected year-to-date oil prices and output, we have revised up our forecast upwards for both. Higher public spending and robust credit growth should support non-oil growth with construction, transport, manufacturing and retail sectors in the lead. A slowdown in global growth and geopolitical tensions constitute key risks, though they are less acute and more evenly balanced than in recent years.

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    Wed, 18 September 2013

    Macroeconomic update (Sept. 2013): Oil income fuels non-oil growth and more

    In this report we update our forecasts for the Saudi economy taking account recent flow of data. Key findings include: Real GDP growth in the Kingdom expected to record 4 percent in 2013. Elevated current and capital expenditures will keep growth of retail, construction and transport sectors on the lead, while government services benefit from higher demand as a result of the new labor market changes. Upward revision to our oil price forecasts supports both fiscal and current account surpluses. High remittances and bigger import bill to weigh on current account balance this year, but higher oil export revenues keep it in the positive double digits territory.

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    Wed, 09 January 2013

    The Saudi economy in 2013

    We expect another year of solid economic performance in 2013. Non-oil growth will be strong and inflation should slightly ease. Lower oil production will cause total real economic growth to slow, and combined with lower oil prices, will reduce the budget and current account surpluses. High government spending will remain the engine of the non-oil economy.

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