Economic Analysis - New Crown Prince And Austerity Rollbacks A Boon For Growth - 24 JULY 2017
BMI View: The elevation of Mohammed bin Salman to Crown Prince and the concomitant easing of fiscal consolidation in Saudi Arabia will support business and consumer confidence over the coming quarters , boosting economic activity . That said, the positive impact of these measures on GDP growth will be partially mitigated by lower-for-longer oil prices and sustained production cuts , while the reversal of consolidation measures will delay the budget ' s return to surplus to 2021.
A number of political and economic developments in Saudi Arabia over the past few months have led us to re-assess our forecasts for GDP growth and fiscal balance in the kingdom for the next two years. Here is a summary to the changes we have made:
We have revised up our real GDP growth forecast for 2017 to 0.0%, up from a contraction of 0.2% previously.
Easing Consolidation, Oil Prices Behind Forecast Changes Saudi Arabia - Real GDP Growth, % (LHS) & Budget Balance, % of GDP (RHS) f = BMI forecast. Source: SAMA, Ministry of Finance, BMI
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