By Sarah Townsend
BMI Research says non-oil sector growth will continue to slow amid austerity drive
Saudi Arabia will fall into recession next year for the first time since 1999, according to a new analysis.
The kingdom’s non-oil sector growth will continue to slow as the government implements fiscal consolidation measures to mitigate the impact of low oil prices, the latest BMI Research paper claims.
As a result of the continued austerity drive, the Saudi Arabian economy is forecast to contract by 0.2 percent in real terms in 2017 – the first annual contraction since 1999 – compared to 0.8 percent growth in 2016.
Meanwhile, oil production is expected to decline to meet OPEC targets and the Saudi economy will slump into recession as economic activity falters, the report said.
In September, the government announced a package of fiscal measures including cutting the public wage bill and postponing several infrastructure projects. BMI Research predicts these will not be the last such moves, and that more austerity initiatives will be announced over 2017.