Saudi Arabia Economic Forecast

Saudi Arabia Economic Outlook

October 2, 2018

The economic recovery continued to gain traction in Q2, with GDP expanding at the fastest pace in one-and-a-half years. The Saudi economy continued to benefit from higher oil prices—which are around 50% above the levels observed last year—and solid crude oil output. Against this backdrop, the government loosened its fiscal stance, which mainly translated into higher handouts and cash transfers to households to offset negative spillovers from subsidy cuts and the introduction of a VAT in January. Despite a soft start to the year, activity in the non-oil sectors is slowly gathering momentum, with the PMI for the non-hydrocarbon sector in July and August hovering above Q2’s average. Saudi Arabia’s solid economic position likely paved the way for JP Morgan to announce, on 26 September, the inclusion of the country into its emerging market government bond indexes next year, which lead Saudi bonds to rally in late September.

Saudi Arabia Economic Growth

Economic growth will gather steam next year as its stronger fiscal position should spur private consumption and investment. However, downside risks still loom large over the country’s economic outlook, particularly stemming from rising trade protectionism that could add downward pressure on global growth, as well as from mounting geopolitical risks in the region and uncertainty about the country’s reform agenda. Met the why particular Consensus Forecast panelists expect growth of 2.0% in 2018. In 2019, growth is seen accelerating to 2.4%, which is unchanged from last month’s projection.

Saudi Arabia Economy Data

20132014201520162017
Population (million)30.030.831.031.732.4
GDP per capita (USD)24,89224,57721,09520,31321,120
GDP (USD bn)747756654645684
Economic Growth (GDP, annual variation in %)2.73.74.11.7-0.7
Consumption (annual variation in %)3.26.16.82.22.0
Investment (annual variation in %)5.67.53.7-14.4-7.0
Industrial Production (annual variation in %)0.23.15.02.4-2.3
Unemployment Rate5.65.85.75.65.9
Fiscal Balance (% of GDP)6.4-2.3-14.8-12.9-8.9
Public Debt (% of GDP)2.11.65.813.117.1
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)18.19.8-8.7-3.72.2
Current Account Balance (USD bn)13573.7-56.7-23.815.2
Trade Balance (USD billion)22318444.355.8112
Exports (USD billion)376342204184221
Imports (USD billion)153158159128119
Exports (annual variation in %)-3.2-8.9-11.6-9.820.4
Imports (annual variation in %)8.13.30.5-19.8-6.6
International Reserves (USD)726732616536496
External Debt (% of GDP)12.313.113.819.8-  

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Saudi Arabia Facts

ValueChangeDate
Bond Yield2.490.0 %Jun 23
Exchange Rate3.750.0 %Oct 16
Stock Market0.21.00 %Oct 12

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