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Home - October 2018

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ECONOMIC TRENDS

The government has recognised that boosting public spending is vital in sustaining the momentum of its ambitious diversification plan.   


OIL & GAS

Demand forecast has been on the upside and the US dollar remains strong, leading oil prices to a steady ground.


TRANSPORT

The new transport facility will have the capacity to carry 60 million passengers a year, boosting the kingdom’s pilgrimage tourism industry.

PETROCHEMICALS

Robust investment in downstream projects assures the kingdom of an enviable market share in the industry.      


SME

Business creation is becoming a strong career choice for many Saudi nationals, which would help advance the country’s shift towards a knowledge-based economy.

COMMODITY

Threats of trade tariffs between two of the world’s largest economies have triggered mixed market performance among industrial and precious metals. 



 IN THIS EDITION

The Saudi economy is on the verge of a breakthrough: a new expansionary budget, increasing prospects pointing to higher growth, and crude oil prices touching USD 75 per barrel are a recipe for a strong 2019.
 
The Ministry of Finance’s preliminary budget for 2019 reveals that expenditure would soar to SAR 1.1 trillion, as the government continues to fund several programmes and implement relevant initiatives outlined in the fiscal balancing programme.
 
“Attention to direct the increase in expenditure as much as possible to capital expenditure, which contributes to the development of infrastructure and improvement of government services, while at the same time revitalising the economy and improving the investment environment,” the ministry said, signalling that it plans to accelerate expenditure to stimulate growth.
  
The spending levels will rise over the next three years, but deficit as a percentage of GDP is set to narrow to 3.7% by 2021, compared to 5% this year.


The government forecast shows real GDP growth will rise to 2.3% in 2019, gradually improving to 2.4% in 2021, “as a result of the impact of structural economic reforms in the medium and long term,” the ministry said.
 
“Markit’s purchasing manager’s index also points to higher growth in the fourth quarter of 2018.
“We remain optimistic that sustained higher oil production will support faster expansion in the non-oil sectors in Q4, particularly manufacturing, transport and logistics,” according to Markit’s latest business sentiment survey. “This view appears to be shared by the majority of firms surveyed, as nearly 39% of firms surveyed expect their output to be higher in 12 months, the most since the May survey.”


Other indicators are also suggesting an upturn in economic activity, including progress on major projects, such as NEOM, and completion of a major infrastructure development. The start of the high-speed rail connecting Jeddah to the Holy Cities is considered an engineering feat and is vital for the government to reach its annual target of accommodating 30 million pilgrims annually by 2030, from the current level of 20 million.
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