Unprecedented setback awaits the Kingdom’s economy
The International Monetary Fund (IMF) predicted an unprecedented setback for the Kingdom’s economy in terms of growth on the back of regional tensions, falling oil prices, escalating the failure of the Al-Saud regime and its internal and external confusion.
In its Global Economic Prospects report, the IMF predicted that the Kingdom’s economy would grow by 0.2 percent against a previous forecast of 1.9 percent.
It was the worst growth forecast for the wealthy kingdom since its economy shrank by 0.7 percent in 2017.
But the IMF said Saudi growth next year would reach a 2.2 percent threshold, with the Kingdom’s non-oil sector expected to gain further strength in 2020.
The Saudi regime recently resorted to cutting government subsidies on fuel, imposing taxes on foreigners working on the kingdom’s land and a 5 percent value-added tax, and raising the prices of soft drinks, energy drinks and tobacco.
At the end of September, Fitch announced a downgrade of the Kingdom’s credit rating by one notch due to “geopolitical and military tension in the Gulf region” after unprecedented attacks on two oil facilities in the kingdom.
Oil and gas prices, the main sources of revenue in the region, fell 13 percent between April and October, with crude prices continuing to fall until 2023.
The Fund said that the attacks against oil installations in Saudi Aramco in the middle of last month created tensions and uncertainty in the region, especially as it came after attacks on oil tankers and ships in the Gulf waters.
In 2018, Saudi GDP rose 2.2 percent, against a contraction of 0.7 percent in 2017.
But the World Bank has pointed to the possibility of reversing the slowdown in growth by boosting private non-oil activity against the backdrop of increased government spending.
The bank’s current estimate is well below Saudi Arabia’s own forecast, with the kingdom projecting GDP growth of around 1.9% this year.
Government data showed last month that the Saudi economy slowed sharply in the second quarter of this year as a result of restricting crude production beyond the target under the supply agreement led by the Organization of Petroleum Exporting Countries (OPEC) to support oil markets.
