Economic updates
Our in-depth, independent reports cover the macroeconomic environment, the Saudi government’s annual budget, and Saudi Arabia’s monetary and financial developments, labor market, and inflation.
Petrochemicals and the Vision 2030
The Saudi petrochemical industry is vital to the Kingdoms non-oil economy with chemical and plastic exports comprising a substantial 60 percent share of total non-oil exports. As a result, the sector has been identified by both the National Transformation Program (NTP) 2020 and Vision 2030 to help lead the push away from fossil fuel reliance. But this restructuring of the sector comes at a time when it is already facing up to a number of challenges, both at home and abroad. Besides seeing a drop in global chemical prices in the last two years, the sector has also seen domestic feedstock prices being raised in 2016, with further rises expected in 2020. In addition, global competition is set to intensify, especially from the US and China, where significant rises in petrochemical capacity are expected in the next few years.
The Saudi Parallel Market (Nomu)
Although Saudi Arabia is the first country in the Gulf region to launch a parallel market, such markets have existed since the 1970s in many mature economies - US NASDAQ and the UKs FTSE AIM are perhaps the best examples. That said, replicating the success of some of the more established parallel markets will not be easy. Jadwa Investments latest report takes a closer look at the Parallel Market and its impact on the Saudi economy.
Fiscal Balance Program 2020: The Path to Fiscal Sustainability
Macroeconomic reportAlong with the 2017 budget statement, the government announced details of the Fiscal Balance Program (FBP 2020), one of the programs highlighted in Vision 2030. The FBP contains all reforms relevant to reaching a balanced budget by 2020 and includes initiatives designated for enhancing spending efficiency, reforming energy prices, and promoting non-oil revenue. The FBP also touches on critical socioeconomic aspects, such as the creation of a “Household Allowance Program”, and the announcement of more detailed plans to support private sector economic activity.
Monetary and financial update: (Rebound in monetary aggregates)
In December 14, 2016, the Saudi Arabian Monetary Authority (SAMA) increased its reverse repo policy rate by 25bps to 0.75 percent, its second such increase since 2008, mirroring the hikes in the US. Meanwhile, SAMAs key policy repo rate was kept unchanged at 2.0 percent. SAMAs rate increase and the prospect of further Fed hikes in 2017 will not have a significant impact on the domestic liquidity situation. This is specifically due to SAMA recently passing several measures to enhance liquidity in the domestic financial system.