Oil market dynamics and Saudi fiscal challenges
Macroeconomic ReportThe recent OPECs decision not to cut output adds further uncertainty not only on the global oil market, but also on the outlook for the Kingdoms fiscal policy. In this report we examine the global environment that led to such decision. We note that while such decision along with other variables in the market would result in different price levels over the next two years, prices of $85 and 83 per barrel for 2015 and 2016, respectively, are most likely. These lower prices will have a direct impact on the balance of payments and fiscal position of the Kingdom. In this report, we examine a number of fiscal policy reactions to different budgetary outcomes and implication of each on the non-oil economy.
Q2 2017 budget statement: (the fiscal deficit continues to show yearly declines).
Macroeconomic ReportDue to an increase in government revenue, by 6 percent, and a drop in expenses by 1 percent, year-on-year, the fiscal deficit declined to SR46.5 billion in Q2 2017, compared to SR58 billion a year ago. Continued yearly improvements in oil revenue helped lift overall government revenue in Q2 2017, whilst total government expenses dropped by 1 percent year-on-year in Q2 2017. This was largely a result of a drop in capital expenditure, which fell by 12 percent year-on-year, whereas current expenditure rose by 1 percent year-on-year.
Saudi Arabia's 2014 budget
Macroeconomic ReportAnother expansionary budget was announced for 2014. The budget highlights the government's intention to continue to stimulate the economy. Budgeted spending and revenues were both at all-time highs. Spending priorities are consistent with previous years.
Macroeconomic Update – August 2021: (The Saudi economy: on a very firm footing)
Macroeconomic ReportBoth actual and flash estimates of the Kingdoms GDP published by the General Authority for Statistics (GaStat) have shown strong non-oil sector growth in H1 2021. This combined with our expectation of continued growth in H2, has led us to upgrade our full year 2021 GDP forecast.
