Saudi Arabia Economic Forecast

Saudi Arabia Economic Outlook

July 2, 2019

The oil sector dragged on overall growth in the first quarter as the country took on the lion’s share of the oil production cuts agreed with OPEC+. This trend is expected to continue at least until the end of the year given the oil production cuts will likely be extended at the 1–2 July OPEC+ meeting. Dynamics in the non-oil sector, however, are gradually strengthening thanks to bolder government support and a recovery in private sector credit. In this regard, the non-oil PMI hit an over one-year high in May on solid new orders and output. Job creation in the private sector, however, has remained lackluster in 2019 despite the recovery in non-oil activity and the implementation of the Saudization program, which restricts jobs for foreign workers. Meanwhile, the war of words between Iran and Saudi Arabia continued to escalate in recent weeks, especially following the downing of a U.S. drone in the Persian Gulf and increasing attacks on Saudi infrastructure launched by Yemen’s Iran-backed Houthis.

Saudi Arabia Economic Growth

Large oil production cuts are expected to weigh on growth this year, although the economy will benefit from stronger public spending and a recovery from the introduction of a VAT last year. The main risks to the outlook are the uncertain global economic outlook, which could trim oil demand, and elevated geopolitical risks in the region. FocusEconomics panelists expect growth of 1.6% in 2019, which is unchanged from last month’s projection, and 2.2% in 2020.

Saudi Arabia Economy Data

20132014201520162017
Population (million)30.030.831.031.732.6
GDP per capita (USD)24,89224,57721,09520,31321,152
GDP (USD bn)747756654645689
Economic Growth (GDP, annual variation in %)2.73.74.11.7-0.7
Consumption (annual variation in %)-  -  -  -  -  
Investment (annual variation in %)5.67.53.7-14.3-0.1
Industrial Production (annual variation in %)0.23.15.02.3-2.4
Unemployment Rate5.75.95.75.65.9
Fiscal Balance (% of GDP)5.6-3.5-15.8-12.9-9.2
Public Debt (% of GDP)2.11.65.813.117.2
Money (annual variation in %)11.114.62.43.6-1.0
Inflation Rate (CPI, annual variation in %, eop)2.51.91.31.0-1.1
Inflation Rate (CPI, annual variation in %)3.52.21.22.1-0.8
Policy Interest Rate (%)2.002.002.002.002.00
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)18.19.8-8.7-3.71.5
Current Account Balance (USD bn)13573.7-56.7-23.810.5
Trade Balance (USD billion)22318444.355.898.5
Exports (USD billion)376342204184222
Imports (USD billion)153158159128123
Exports (annual variation in %)-3.2-8.9-40.6-9.820.9
Imports (annual variation in %)8.13.30.5-19.8-3.5
International Reserves (USD)726732616536496
External Debt (% of GDP)12.313.113.824.627.7

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Saudi Arabia Facts

ValueChangeDate
Bond Yield2.490.0 %Jun 23
Exchange Rate3.750.0 %Jul 11
Stock Market0.21.00 %Jul 11

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