Saudi Arabia Business Forecast Report Q1 2009

Publication Date	November 2008
Publisher	Business Monitor
Product Type	Report
Pages	57
ISBN Number	not applicable
Product Code	BMI03037

Buy this product or for assistance call +44 20 7060 7474

PDF £250.00$416 | €280

FAX Order above formats by FAX

Summary

Slowdown Ahead... But Not The End Of The World

The outlook remains significantly gloomier as we move into 2009 than it was this time last year, with lower oil prices, a crashing stock market, a slowing global economy and concerns over a possible housing market correction, led by Dubai, all feeding through into higher levels of risk aversion. Of course there is an associated political risk with this scenario: any deterioration in living standards both among Saudis and expatriate labourers could lead to unrest. We think the Saudi government will do as western governments have done throw money at the problem and boost liquidity aggressively to keep the economy growing. In this regard Riyadh is at an advantage as it has the funds to do this, and is not reliant on its services sector. The Saudi oil industry is projected to grow in real terms throughout our forecast period.

Economically all is by no means lost. Saudi Arabia's growth has not been up to that of Qatar or Dubai over the last few years, and its real estate sector has been less driven by speculative flows. We have left our growth forecasts for Saudi Arabia unchanged in the wake of recent bad news at 5.7% and 5.1% for 2008 and 2009 respectively. We had already factored in a boom year followed by a slowdown in 2007, and we still think that this core scenario is correct. Most indicators growth, balance of payments, fiscal balance will have peaked in 2008, but all will remain positive.

On the political side, we expect this slightly less stellar economic position to keep Saudi Arabia compliant. Although we expect the lower oil price situation to reduce the relative geopolitical clout of Iran, which has kept Saudi Arabia under pressure over the last few years, it will also take its toll on Riyadh's ability to maintain control domestically. We expect it to continue to play a cooperative role globally, both through its foreign policy initiatives (in Afghanistan, Pakistan and the Palestinian territories) and its role in OPEC.

There will be a deterioration in the business environment this year, but more as a function of developments in global financial markets than any weaknesses inherent to Saudi Arabia. Indeed, the Kingdom came in at a very impressive 16th place globally in the World Bank's Ease of Doing Business 2009 index, up from 24th in 2008, and this will serve it well when credit conditions ease. Our own business environment rating is slightly less stellar: we give the Kingdom a score of 60.2, putting it in a still respectable 38th position worldwide, with upside risks going forward, given ongoing reform and infrastructure improvements over the last few years.

Content

Executive Summary
Slowdown Ahead. But Not The End Of The World
Chapter 1: Political Outlook
- Swot Analysis
- Bmi Political Risk Ratings
- Foreign Policy
- Cooperative Stance To Continue
- Saudi Arabia Will Continue To Pursue ProWestern Policies, Particularly As Leaner Economic Times Reduce The
- Governments Domestic Clout, But If Times Get Too Hard, This Could Backfire
List Of Tables
- Table: Saudi Arabia Political Overview
Chapter 2: Economic Outlook
- Swot Analysis
- Bmi Economic Risk Ratings
- Economic Activity
- Reasons To Be Cheerful
- There Is No Doubt That A Tide Of Pessimism Has Overtaken The Gulf Region Over Recent Weeks, And With Downward
- Growth Revisions, Cancelled Ipos And Disappointing Corporate Results, There May Be A Vicious Circle In Play
List Of Tables
- Table: Economic Activity
- Fiscal Policy
- All Change? Fiscal Implications Of Oil Price Slide
- The Saudis Will Up Spending To Counter The Oil Price Slide, But Unless Oil Goes Below Us$48/Bbl On A Sustained
- Basis, It Will Continue To Record Fiscal Surpluses Throughout The Forecast Period
List Of Tables
- Table: Fiscal Policy
- Monetary Policy
- Inflation To Fall From 2009
- Saudi Arabia Will See Inflation Slip Fairly Sharply From 2009, But Interbank Rates Will Stay High, In Line With The
- Global Reassessment Of Risk And Lower Liquidity. The Central Bank May Well Intervene Further To Increase Liquidity
List Of Tables
- Table: Monetary Policy
- Investment Climate
- Business Challenges Ahead
- Saudi Arabias Business Climate Has Improved A Lot Over Recent Years, But Negative Global Developments Will
- Make It Hard For Corporate Activity In 2009
- Chapter 3: 10Year Forecast
  - The Saudi Arabia Economy To 2018
  - Politics Main Risk To LongTerm Outlook
  - Assuming The Survival Of The Current Form Of Government Into The Medium Term, We See Ongoing Strong Growth
  - And Asset Accumulation Via Real Expansion In Investment And Exports, Amid Still Historically High Oil Prices
List Of Tables
- Table: LongTerm Macroeconomic Forecasts
- Chapter 4: Special Report
  - Why The Us Can Remain World Superpower
  - Wealth Is Shifting East
List Of Tables
- Table: Geopolitical Power Index
The Uss Current Financial Woes Will Not Necessarily Undermine Its Position As A Global Superpower
Chapter 5: Business Environment
- Swot Analysis
- Bmi Business Environment Risk Ratings
- Business Environment Outlook
- Institutions
List Of Tables
- Table: Bmi Business And Operational Risk Ratings
- Table: Bmi Legal Framework Ratings
- Infrastructure
List Of Tables
- Table: Labour Force Quality
- Market Orientation
List Of Tables
- Table: Middle East & Africa Annual Fdi Inflows
- Table: Bmi Trade Ratings
- Table: Top Export Destinations
- Operational Risk
- Chapter 6: Bmi Global Assumptions
  - Global
List Of Tables
- Table: Global Assumptions
- United States
- Eurozone
- Japan
- China
- Commodities