Saudi Arabia’s 2019 budget predictions optimistic, say analysts

      Published on Saturday, 22 December , 2018      474 Views     
Saudi Arabia’s 2019 budget predictions optimistic, say analysts

  • Business

Top oil exporter Saudi Arabia is on course to post a higher deficit and lower economic growth than budgeted, due to a renewed fall in oil prices, economic experts said.



For the kingdom to achieve the objectives set out in its 2019 budget released on Tuesday, oil prices must average at least $80 (70 euros) per barrel, reports said.

The world’s largest crude exporter issued an expansionary budget for next year, projecting record spending based on generous oil revenues, based on a recovery of oil prices from depths plumbed in 2015.

But in the past few weeks, much of the earlier gains in oil markets have been wiped out as prices dived by around 35 percent.

“Saudi Arabia’s 2019 budget was premised on optimistic assumptions regarding oil prices that are likely to be disappointed,” London-based Capital Economics said in a report on Wednesday.

“We think that oil prices will stay low and our end-2019 forecast for Brent is $55 a barrel as global oil demand growth weakens,” it said.

Saudi Arabia projects a deficit of $35 billion next year, or 4.6 percent of Gross Domestic Product (GDP), about 32 percent lower than the estimated deficit of $52 billion for 2018.

Spending is estimated at $295 billion, the largest in the oil-rich kingdom’s history, while revenues — mostly from oil — are estimated at $260 billion, up 24 percent on 2018 estimates.

“The authorities estimate that oil revenues will come in at 662 billion riyals next year which, by our calculations, assumes that oil prices will average around $80 a barrel,” Capital Economics said.

Saudi Jadwa Investment, an independent think-tank, estimated that oil revenues will come in at least $9 billion lower than projections, due to the renewed fall in oil prices.

It said this will result in a deficit of $44 billion, $9 billion higher than the official projection.

Capital Economics expected the budget deficit to be around double the government’s projection at around 10 percent of GDP.

The reports also said that GDP growth next year will be lower than the government’s forecast of 2.6 percent – Capital Economics estimated a rate of 1.3 percent, while Jadwa predicted 2.0 percent.

Saudi Arabia has posted repeated budget deficits since oil prices crashed in 2014, accumulating a combined shortfall of $313 billion since then.

But it has managed to reduce gradually the size of the annual budget gap, thanks to the recovery of oil prices between early 2016 and October 2018.

It has also sought to bolster revenues by imposing a value-added tax, levies on expatriates and hikes in fuel and power prices.



 

Keywords:
Category Business | 2018/12/22 latest update at 10:00 PM
Source : Arabian Business | Photocredit : Google
475 Views
Comments Add comment



Gulf Media

Related Articles

The editorial staff of Saudi Arabia Today would like to give all of its readers from Gulf and Saudi Arabia and the whole world the opportunity to participate actively in the development of the website! If you have something interesting, fun, scandalous - just something worth to be seen from more people. Capture it and share it in the Saudi Arabia Today with a short text.

Do you have information you want to reach our readers?

Send article/s

You can subscribe to our Facebook, Twitter and Google pages or use our RSS feed channel to always read the most important news about Saudi Arabia, the Gulf and the world.


Sponsored Publications



Saudi Arabia: King Salman’s elder brother Prince Bandar dies at 96 King

Saudi Arabia: King Salman’s elder brother Prince Bandar dies at 96

In Saudi Arabia, King Salman’s elder half-brother, who was the tenth son of the country’s founding monarch, has…

Saudi Arabia urges action to deter maritime disruptions King

Saudi Arabia urges action to deter maritime disruptions

The Council of Ministers, presided over by Custodian of the Holy Mosques King Salman, here in the Tabuk…

Saudi Cabinet decides to allow pilgrims free movement King

Saudi Cabinet decides to allow pilgrims free movement

The Council of Ministers, presided over by the Custodian of the Two Holy Mosques King Salman at Al-Salam…

Custodian of the Two Holy Mosques Chairs Cabinet’s Session King

Custodian of the Two Holy Mosques Chairs Cabinet’s Session

The Custodian of the Two Holy Mosques King Salman bin Abdulaziz Al Saud chaired the Cabinet’s session at…

GULF TV

Popular in GULF TV

PIRELLI “DREAMING” – THE CAL 2019 making of Full Version | Fashion Channel

2308 Views

A photographic tale of the aspirations of four women and their determination to achieve their goals, each one…

Latest videos in GULF TV

Events

Lifestyle

Culture

Sport

Science & Technology

Government