Saudi Arabia

DRIVER: Saudi Arabia could see some tumultuous economic policy changes provoked by the lower oil price era and the emerging challenge from renewable energies. It also faces threats from Middle East turmoil.

• On the supply side, the IEA noted the production cuts by the alliance of exporters led by Saudi Arabia and Russia, but added that by the end of 2020, U.S. production could be down 2.8 million barrels a day, three times the projected drop in Saudi Arabia's output.
• Saudi Arabia, the world's top oil exporter, is issuing $2.5 billion worth of Islamic bonds, or Sukuk, on Tuesday, returning to the bond market to take advantage of the low borrowing costs in hopes of replenishing its government coffers as persistently low oil prices depress revenues.
• Saudi Arabia's government will raise the debt ceiling from 30% to 50% of GDP with a higher borrowing requirement due to COVID-19 and the fall in oil price.
• Countries with low oil production costs such as Saudi Arabia have high government spending bills and will likely run a deficit of $150 billion this year, drawing heavily from sovereign savings.
• The decisions by Russia and Saudi Arabia to forgo production cuts, combined with greater demand declines worldwide, have pushed prices to levels not seen in two decades, levels that could drop below production costs.
• Due to the lower oil prices, Kuwait could see a 20% drop in GDP in 2020, with Qatar down 17%, a 12% fall for Saudi Arabia and an eight percent drop for UAE.
• An oil price war between Saudi Arabia and Russia will most likely accumulate over the course of the year, with no end in sight until 2021 at the earliest.
• An enhanced digital job market has the potential to create 1.3m additional jobs in the GCC [Gulf Cooperation Council] by 2025, including 700,000 in Saudi Arabia alone.
• Saudi Arabia's Prince Mohammed bin Salman has gambled that a threatened cut of almost US$ 1 trillion to global oil revenue will force Russia's President Vladimir Putin back into the embrace of OPEC.
• If the price war between Russia and Saudi Arabia continues while the world slips into a recession, the oil glut could grow to 800 million to 1.3 billion barrels in the first six months of this year.
• Putin met with Saudi Arabia's Crown Prince Mohammed bin Salman at the G20 and announced Russia will continue to cooperate with Saudi Arabia and OPEC to manage the market.
• The dynamic to watch will be whether Russia and Saudi Arabia will come to an agreement on crude production levels in the early and middle parts of next year.
• Reforms implemented under Saudi Arabia's Vision 2030 economic transformation programme may have caused some short-term pain but have led to the creation of new sectors and opportunities that will definitely add to employment and to GDP.
• Expect prices for most commodities to rise in 2020 on inflation concerns triggered by a tight labour market and high oil prices possibly caused by a rise in geopolitical tensions in the middle east between Iran and Saudi Arabia.
• With AI-powered robots being particularly suited to the retail industry, Gartner's research predicts that 77% of retailers plan to deploy AI as early as 2021.
• Global market for retail robots is expected to witness a CAGR of 30% between 2017 and 2028.
• The global Industrial Robotics Market In Food And Beverages Industry is expected to grow with an incredible CAGR of 29% through 2019.
• In 2019, a new generation of gizmos, gadgets, autonomous robots and artificially intelligent technologies will be making their way into our dining experiences.
• Manufacturing (46%) and wholesale and retail (44%) have the highest risk of automation the overall UK economy has a 30% risk of jobs being automated.
• Up to 30% of existing jobs could be impacted by automation by the mid-2030s, with the transport, manufacturing and retail sectors predominantly affected.
• By the mid-2030s, over 40% of existing jobs in the UK retail and wholesale sector could potentially be displaced by automation.
• Around 44 percent of jobs in the retail sector are at risk of automation by 2030.
• The wholesale and retail sector in the UK is one of the sectors most at risk from job losses through automation in the next 10-15 years.

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Last updated: 24 May 2020