S&P Global Ratings has affirmed Saudi Arabia’s rating at “A-/A-2” and revised its outlook to positive from stable, citing improving gross domestic product growth and fiscal dynamics over the medium term as the kingdom continues its pandemic-induced economic recovery.
“The positive outlook reflects our expectation of improving GDP growth and fiscal dynamics over the medium term tied to the country’s emergence from the Covid-19 pandemic, improved oil-sector prospects and the government’s reform programmes,” the agency said.
Saudi Arabia, the Arab world’s largest economy, continues to recover from the impact of the pandemic on the back of higher oil prices, an accelerated vaccination programme and government policies to attract more investment.
The kingdom’s economy is estimated to have expanded by 3.3 per cent last year following a contraction of 4.1 per cent in 2020 after the onset of Covid-19. The agency expects the kingdom’s economy to grow by 5.8 per cent in 2022 and by an average of 2.7 per cent from 2023 to 2025.
“In 2020, Saudi Arabia was hit hard by the twin shocks of the pandemic and lower global oil prices and demand, but since 2021, the country’s economy has rebounded as the wider global economy has recovered from the pandemic, and oil demand and prices have improved,” the ratings agency said.
Since the Russia-Ukraine conflict began last month, demand for Saudi crude oil has been increasing as western countries, including the US, the UK, Japan and the EU, seek to reduce imports from Russia.
The agency revised its oil forecast for 2022 amid the Russian invasion of Ukraine. It expects Brent, the global benchmark for two thirds of the world’s oil, to average $85 a barrel in 2022, $70 in 2023 and $55 a barrel from 2024 onwards.
Oil prices are currently trading higher as Russia continues its war. Brent rose to $120.65 a barrel at the close of trading on Friday. West Texas Intermediate, the gauge that tracks US crude, settled at $113.90 a barrel.
Saudi oil production will average about 10.5 million barrels a day in 2022, compared with an average of 9.1 million in 2021, 9.2 million in 2020 and 9.8 million in 2019.
Saudi Arabia is the only country in the world that maintains a large excess oil export capacity, of about 2 million bpd, and has the capacity to swiftly increase production if required, according to the agency.
“Low oil prices, alongside low production volumes tied to the Opec+ quota, led the general government’s fiscal deficit to rise to 9.5 per cent of GDP in 2020, but improving conditions in 2021 then led the deficit to fall sharply to 0.8 per cent,” it said.
“We forecast a general government budget surplus of 3.3 per cent of GDP in 2022, the first surplus since 2013. We forecast a further surplus in 2023, before a fall in prices leads to a return to small deficits in 2024 and 2025.”
Private equity and investment group Jadwa Investment also projects the kingdom’s economy will grow by 7.7 per cent in 2022 after 3.3 per cent growth last year.
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Under ‘snapback’, measures imposed on Iran by the UN Security Council in six resolutions would be restored, including:
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Document everything immediately; including dates, times, locations and witnesses
Seek professional advice from a legal expert
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How to join and use Abu Dhabi’s public libraries
• There are six libraries in Abu Dhabi emirate run by the Department of Culture and Tourism, including one in Al Ain and Al Dhafra.
• Libraries are free to visit and visitors can consult books, use online resources and study there. Most are open from 8am to 8pm on weekdays, closed on Fridays and have variable hours on Saturdays, except for Qasr Al Watan which is open from 10am to 8pm every day.
• In order to borrow books, visitors must join the service by providing a passport photograph, Emirates ID and a refundable deposit of Dh400. Members can borrow five books for three weeks, all of which are renewable up to two times online.
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UAE currency: the story behind the money in your pockets
