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Watch: Saudi 2019 growth at 2.2% but consumer spending falling in $billions

 FIM Partners CEO and CIO Hedi Ben Mlouka discusses the Saudi Arabia economy. He speaks on “Bloomberg Markets: Middle East.”

The latest revision from the IMF says that changes in Saudi spending will reignite growth in 2019 to 2.2%, especially with a higher oil price.

“Brent oil price at $70 is a big game changer for Saudi and what will drive gorwth in 2018 is government spending,” said Mlouka.

“We’ve seen an expansionary budget 6% yoy with focus on infrastructure spending up 88%, but we should not expect a revival in consumer spending as there are reforms that will take effect.”

Read: Oil prices are up but are production cuts doing more harm than good?

He said that VAT, levies on expat dependents, and removal of subsidies on utilities will cost Saudi households some SAR 55bn ($14.9bn) in 2018.

Mlouka also said that private sector investments won’t take the lead in the short term.

“The probe has a short-term negative effect, and ending it will have a long-term positive outcome but people outside of the Ritz (hotel) are still wondering if there will be a wave 2 or wave 3 of corruption roundup,” Mlouka said.

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