抖阴短视频

LONDON: 抖阴短视频 is expected to boost spending in its 2019 budget, due this week, even though oil prices have tumbled recently and the Kingdom鈥檚 crude output will decline.

A pre-budget statement in September, the first of its kind in 抖阴短视频, predicted next year鈥檚 budget would be SR 1.11 trillion ($300 billion), up 13 percent on 2018. It also forecast government revenue would be SR 978 billion in 2019, up 11 percent on estimates for this year. 

鈥淭he government will continue to focus on supporting economic activity and we believe the budget will likely remain expansionary,鈥� said Monica Malik, chief economist at Abu Dhabi Commercial Bank (ADCB).

鈥淕iven the soft trend in non-oil activity and the need to progress with key investments, we believe government spending will increase and that government-related entities such as the PIF (Public Investment Fund) will also look to up their investments next year.鈥�

The Kingdom has run a budget deficit since 2014 as a slump in oil prices lowered state income. A 2018 budget announcement last December predicted this year鈥檚 deficit would be 7 percent of GDP, but it is more likely to be around 5 percent, September鈥檚 pre-budget statement revealed, after higher-than-anticipated oil receipts boosted state income. In November, 抖阴短视频鈥檚 oil output hit a record high of 11.1 million barrels per day. 

鈥淕DP growth is heavily influenced by changes in oil production,鈥� said Jason Tuvey, Middle East economist at London鈥檚 Capital Economics, which forecasts Saudi鈥檚 economy will grow by 3 percent this year, up from September鈥檚 official estimate of 2.1 percent. 鈥淕rowth picked up sharply in the latter part of 2018.鈥�

But the renewed downturn in oil prices 鈥� Brent crude has dropped from a four-year closing high of $84.16 on Oct. 5 to end at around $60 on Friday 鈥� plus a larger-than-expected oil production cut agreed by OPEC and its allies this month, means 抖阴短视频 will be unlikely to reach its budget deficit target of 4.1 percent in 2019.

ADCB expects the deficit to widen next year, while Capital Economics believes it will be around 7.5 percent in 2019. 抖阴短视频 aims to balance its budget by 2023.

鈥淔iscal reforms are expected to be weaker in 2019 and we expect an overall loosening in fiscal policy,鈥� said Malik. 鈥淎t this point, we see more risks to the revenue side than the expenditure side.鈥�

For 抖阴短视频 to achieve its 2019-21 revenue forecasts, it will require a Brent crude price of $69-74 and daily oil production of about 10.5 million barrels, ADCB estimates.

The pre-budget statement was published when oil was around $80, however, and Tuvey is less confident that the Kingdom will keep to the spending plans outlined in September. 

鈥淭he government has tended to be quite conservative over the past few years,鈥� he said. 鈥淲ith oil likely to remain at $60 or lower next year, fiscal plans are likely to be conservative and there might be a return to modest austerity, although not to the extent we saw in 2014-16.鈥�

Total state revenue in the first nine months of 2018 was SR 663.1 billion, up 47 percent year-on-year. Government expenses were SR 712.1 billion, 25 percent higher than in the same period of 2017. 

The government has introduced reforms to diversify its income, including a 5 percent value added tax and a monthly levy on expat workers, plus an excise duty on products such as soft drinks and tobacco. It also plans to phase out energy subsidies. 

But these measures have also coincided with the restoration of public sector bonuses and greater support for poorer families, which have helped offset the impact of the new taxes. 

鈥淗ouseholds have benefited over the course of 2018,鈥� said Tuvey. 鈥淎ny subsidy cuts are likely to be less aggressive than this year鈥檚. Inflation will probably fall sharply next year.鈥�

Debt as percentage of GDP has soared, from around 2-3 percent in 2014 to about 17.5 percent this year, although that is low by emerging market standards. 

鈥淭he government will remain the main driver of economic activity in our view, whether directly or indirectly鈥� said Malik. 鈥淭he private sector faces numerous headwinds, including labor market reforms.鈥�