The Gross Domestic Product (GDP) in Saudi Arabia was worth 792.97 billion US dollars in 2019, according to official data from the World Bank and projections from Trading Economics. The Crown Prince´s grip on power remains firm, with the risk of opposition from senior members of the royal family being rather low. An extension of OPEC production cuts restrains the short-term growth prospects of Saudi Arabia’s still oil reliant economy. Saudi Arabia's economy grew by a weaker-than-expected 0.3% in 2019 as the oil sector contracted sharply, official data showed on Sunday, although the non-oil sector accelerated. These have contributed to softening GDP growth to 1.7% year-on-year (y/y) in Q1 2019 from 2.4% in 2018.
All this has led to a notable increase in non-payment notifications in 2018, which has continued in 2019. With US shale production continuing to increase in the first half of 2019, Saudi Arabia’s oil production cuts were deeper than pledged, with output in July standing at 9.65mbd versus the voluntary limit under the OPEC+ accord of 10.3mbd. China's crude oil imports from top supplier Saudi Arabia rose nearly 47% in 2019, with December shipments from the kingdom flat to a year earlier, customs data showed on Friday. The recent interest rate cut by the US Federal Reserve that ended the US monetary tightening cycle has mitigated the risk of capital outflows and contains borrowing costs for Saudi Arabia, as no further interest rate hikes are required to maintain the interest rate differential. Mainly construction (contractors and subcontractors) and pharmaceutical distributors are affected by public payment delays.MENA Country Report Saudi Arabia 2019Austerity measures helped to reduce the budget deficit from 13% of GDP in 2016 to 6% of GDP in 2018. In September 2019, a drone/missile attack on Saudi Arabian oil facilities led to a serious short-term disruption of oil production. The latter is struggling with the mass departure of expats since end of 2016, as Saudi nationals have so far proven unwilling to pick up the slack.The economy is currently forecast to expand by about 3.5% in 2020, however, this depends on decent performance in agriculture, tourism, and exports.The financial buffers of Saudi-Arabia are still large enough to easily cover the external financing requirements and defend the exchange rate peg with the US dollar. Saudi Arabia produces most of its wealth through the sale and export of petroleum products, of which it is the world's second-largest producer. The SWF will be partly financed by the sale of a 5% stake in the state oil company Aramco.Crown Prince Mohammed bin Salman remains the main driver of an ambitious reform program (“Saudi Vision 2030”) to diversify the economy away from oil and to boost the private sector. July 7, 2020. The second phase of a four-year private sector stimulus plan was launched in November 2018, with large investments pledged to housing, tourism, transportation, power and education projects.Saudi Arabia feels challenged by grown regional influence of Iran, its traditional rival for hegemony in the Gulf region. Nevertheless, deflationary pressures persist, reflecting negative growth in rental prices, in part due to the exit of some 1.8 million foreign workers since 2017.We face big challenges to help the world’s poorest people and ensure that everyone sees benefits from economic growth.
Moreover, the current account deficit is back in surplus since 2017, limiting the drain on reserves, and external debt is low. The Gross Domestic Product (GDP) in Saudi Arabia expanded 1.20 percent in the fourth quarter of 2019 over the previous quarter. Going forward fiscal adjustment will be more gradual, as the focus has shifted to support short-term growth. In any case it is expected that diversification will proceed only slowly, leaving the economy largely dependent on oil revenues and state support for the time being.However, private businesses are still feeling the pinch from the recent oil price slump and subsequent austerity measures (new taxes, subsidy cuts, rising utility costs and levies on expatriates), that negatively impacted domestic demand. DUBAI: Saudi Arabia’s travel and tourism sector is expected to contribute $70.9 billion to the Kingdom’s GDP in 2019, according to the World Travel and Tourism Council. The Saudization scheme to replace cheaper foreign workers with Saudi nationals is hampered by rigid labour laws and skill mismatches.
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