Tarek Fadlallah, chief executive officer at Nomura Asset Management, discusses Saudi Arabia and his investment thoughts. He speaks on “Bloomberg Markets: Middle East.”
A recent Fitch Report showed that receipts of over $100bn in settlement money from anti-corruption probe will bolster Saudi economy, but the full impact will depend on the composition of the assets and the effect on the investment climate, both of which are not yet clear .
“”There is lots of progress on the reform track in Saudi, but transformation doesn’t happen dramatically with GDP hovering at 1.5% in 2018,” said Fadlallah.
He said there are 2 models for transformation, one he calls the “Soviet Model”, which destroys the old economy and starts from scratch.
“The other is to deregulate aggressively and grow the economy at 4,5, or 6% which we are nowhere near that at the moment.”
He said the kingdom did not tear up the rule book, which needs time, but 1.5% growth is not very attractive for foreign investors just yet.
“A debt to GDP of 17% in Saudi is a low level, but rating agencies are looking for sustainable levels for restructuring the economy especially when it comes to paying debts over the long term,” said Fadlallah.