Saudi Arabia Macroeconomic Developments
- Saudi Arabia released its 2022 pre-budget statement that indicates reduced spending and revenues resulting in a faster-than-expected reduction of the national deficit. Spending will total SAR955 billion ($255 billion) while revenues are expected to reach SAR903 billion ($241 billion) in 2022. The government expects the deficit to reach SAR85 billion ($23 billion) in 2021, followed by SAR52 billion ($14 billion) in 2022, and flip to a surplus by 2023.
- Saudi Arabia expects 2.6 percent real GDP growth in 2021 with annual GDP totaling SAR3.1 trillion ($827 billion). The government expects annual inflation to average 3.3 percent in 2021, reflecting residual inflationary effect of the value-added tax increase, before cooling to 1.3 percent in 2022. The target inflation rate for 2023 and 2024 stands at 2 percent.
- S&P Global Ratings affirmed Saudi Arabia A-/A-2 credit rating with a stable outlook. Higher oil prices, easing of production quotas, strong fiscal buffers, and widespread vaccine rollout will support an economic rebound through 2022, according to S&P. Government efforts to eliminate the deficit and fund non-oil diversification initiatives amid a strong oil market were also cited as key positives for the Kingdom’s credit rating.
