Saudi Arabia Economic Forecast

Saudi Arabia Economic Outlook

October 6, 2020

In the second quarter, the economy contracted at the steepest pace since current records began in 2011, marking the fourth consecutive quarterly decline in GDP. The sharp drop in oil production in May–June, coupled with lockdown measures to contain the spread of Covid-19, was behind the unprecedented blow to economic activity. Domestic demand collapsed in the quarter as living allowances were suspended and non-essential businesses were closed. Turning to Q3, the economy should have recovered somewhat as oil output picked up in July–August from June’s near two-decade low. Moreover, the non-oil private sector likely gained steam as lockdown restrictions were eased, as seen through improvements in the PMI in July–August relative to Q2. That said, a sharp increase in the VAT rate in July and a record-high unemployment rate will have weighed on momentum somewhat.

Saudi Arabia Economic Growth

Economic output is projected to contract notably this year, chiefly due to curtailed oil production. Non-oil private sector activity will likely also decline as the VAT hike and a weaker labor market depress private consumption, and a more restrictive budget hinders the economy. Next year, the economy should rebound as the impact of the pandemic fades. FocusEconomics panelists see GDP contracting 5.2% in 2020. In 2021, the panel sees economic growth at 3.7%, which is down 0.1 percentage points from last month’s projection.

Saudi Arabia Economy Data

2015 2016 2017 2018 2019
Population (million)31.131.832.633.434.1
GDP per capita (USD)21,06320,28421,11323,53623,265
GDP (USD bn)654645689786793
Economic Growth (GDP, annual variation in %)4.11.7-0.72.40.3
Consumption (annual variation in %)-  -  -  -  -  
Investment (annual variation in %)3.7-14.00.7-2.14.0
Industrial Production (annual variation in %)5.02.3-2.42.7-2.6
Unemployment Rate5.75.65.96.05.6
Fiscal Balance (% of GDP)-15.8-12.9-9.2-5.9-4.5
Public Debt (% of GDP)5.813.117.219.022.8
Money (annual variation in %)2.50.80.32.77.1
Inflation Rate (CPI, annual variation in %, eop)1.21.0-1.11.9-0.2
Inflation Rate (CPI, annual variation in %)1.22.1-0.82.5-2.1
Policy Interest Rate (%)2.002.002.003.002.25
Exchange Rate (vs USD)3.753.753.753.753.75
Exchange Rate (vs USD, aop)3.753.753.753.753.75
Current Account (% of GDP)-8.7-3.71.59.06.3
Current Account Balance (USD bn)-56.7-23.810.570.649.8
Trade Balance (USD billion)44.355.898.5169129
Exports (USD billion)204184222294262
Imports (USD billion)159128123126132
Exports (annual variation in %)-40.6-9.820.932.7-11.2
Imports (annual variation in %)0.5-19.8-3.51.85.3
International Reserves (USD)616536496496499
External Debt (% of GDP)13.824.627.728.1-  

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Saudi Arabia Facts

Value Change Date
Bond Yield2.490.0 %Jun 23
Exchange Rate3.750.0 %Dec 31
Stock Market0.21.00 %Jan 07

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