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Monday, 24 July 2017

Saudi Economic Pain Will Test Resolve of Prince’s Reform Push - Bloomberg

Saudi Economic Pain Will Test Resolve of Prince’s Reform Push - Bloomberg:

"Saudi Arabia’s drive to reduce the economy’s reliance on oil has hit a snag: its reliance on oil.

More than a year after the kingdom’s dominant leader, Crown Prince Mohammed bin Salman, unveiled a blueprint for the post-oil era, the drop in crude prices is making economists more skeptical about whether some of the plan’s medium-term targets can be met. The reason: lower oil revenue deprives the government of money needed to balance its books by 2020 while trying to stimulate growth to ease the transition’s burden on the population.

IMF data released Friday underscored the challenge. The fund lowered its forecasts for Saudi economic growth this year to “close to zero.” Analysts at Citigroup, EFG-Hermes and Standard Chartered see a bleaker picture, expecting the economy to shrink for the first time since the global financial crisis in 2009, according to data compiled by Bloomberg.

Deeper economic pain will test the authorities’ resolve to pursue tough reform measures as they seek to go against the run of history, which suggests that successful diversification efforts depended largely on policies put in place before a price shock."

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