Saudi Arabia Macroeconomic Developments: Saudi Arabia’s GDP fell 7 percent in Q2 YoY amid lockdown measures that were fully lifted only in the final week of the second quarter. Real estate activities (-0.3 percent) and finance & insurance (-1.1 percent) services were the most resilient sectors while retail & restaurants (-18.3 percent) and transportation (-16.3 percent) were the hardest hit. At current prices, Saudi GDP amounted to SAR564.2 billion ($150.5 billion) in Q2 with government services accounting for 25 percent, oil & gas accounting for 15 percent, and manufacturing accounting for 10 percent of total GDP. The Ministry of Finance projects the Kingdom’s real GDP will decline 3.8 percent in 2020, according to its official pre-budget statement. Saudi Arabia plans to cut spending by 7.5 percent in 2021 to reduce the budget deficit from 12 percent (2020 estimation) to 5.1 percent of GDP (2021 projection). While the Kingdom raised its debt-to-GDP ceiling from 30 percent to 50 percent in March, government debt is only expected to reach 34 percent of GDP in 2020. Saudi Arabia’s preliminary 2021 budget indicates a doubling down on key Vision 2030 programs, including privatization, megaproject development, housing construction, and financial sector reforms.
U.S. Macroeconomic Developments: The consumer confidence index posted the sharpest rise in more than 17 years as both perception of current economic conditions and future expectations improved. Confidence rose 15.5 points to reach 101.8 in September but remains below its pre-virus level and continued improvement may hinge on additional stimulus. However, September’s figure is the highest since the onset of COVID-19 lockdowns. The U.S. unemployment rate fell to 7.9 percent in September as the economy added 661,000 jobs. The pace of job gains slowed as September’s net job gains were less than half of the amount in August. Leisure and hospitality contributed 318,000 jobs during the month and has now recovered more than half of the jobs lost since February. The number of individuals reporting a permanent job loss rose 345,000 alongside a drop in the labor participation rate.
