Economic updates
Our in-depth, independent reports cover the macroeconomic environment, the Saudi government’s annual budget, and Saudi Arabia’s monetary and financial developments, labor market, and inflation.
The Saudi Economy in 2017
Macroeconomic reportWe 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.
Monetary and financial update: (Rebound in monetary aggregates)
In December 14, 2016, the Saudi Arabian Monetary Authority (SAMA) increased its reverse repo policy rate by 25bps to 0.75 percent, its second such increase since 2008, mirroring the hikes in the US. Meanwhile, SAMAs key policy repo rate was kept unchanged at 2.0 percent. SAMAs rate increase and the prospect of further Fed hikes in 2017 will not have a significant impact on the domestic liquidity situation. This is specifically due to SAMA recently passing several measures to enhance liquidity in the domestic financial system.