Audi Capital CIO John Gebeily discusses the Saudi Arabian economy and talks about the country’s debt.
Gebeily said there was no guidance from the Saudi government as to spending levels in 2018, however before the PIF summit lastweek, analysts were pricing at 5-7 per cent more than 2017, whereas the market was bullish at 7-10 per cent. He said following the PIF summit, analysts are back at over 10 per cent.
“We are are also bullish on Saudi equities with bottom line growth expected at 2-3 per cent,” he said adding that in 2018, the same economic drivers, i.e. bnaking, petrochemicals, insurance and healthcare, will be the centers of economic activity.
IMF Managing Director Christine Lagarde was optimistic about the the current cyclical position of the economy, following a visit to Saudi.
She said: “Saudi Arabia had made good progress in initiating its ambitious reform agenda. Fiscal consolidation efforts are beginning to bear fruit. Progress with reforms to improve the business environment are gaining momentum, and a framework to increase the transparency and accountability of government is in place. Effective prioritization, sequencing, and coordination of the reforms is essential, and they need to be well-communicated and equitable to gain social buy-in to ensure their success.
Fiscal adjustment is continuing, with the government containing expenditures and raising additional revenues. A large, sustained, and well-paced fiscal adjustment is needed in the coming years to continue to respond to the effects of lower oil prices on the budget. However, given the strong fiscal buffers, the availability of financing, and the current cyclical position of the economy, fiscal adjustment should be gradual.”