Upload
patrick-ryan
View
510
Download
2
Tags:
Embed Size (px)
Citation preview
The outlook for the Saudi economy in 2012
Presented to the Riyadh Group for British Business
January 14, 2012
G
1
Paul GambleHead of Research
Gl b l i tl kGlobal economic outlook
2007 2008 2009 2010 2011 2012World 5.4 2.8 -0.7 5.1 4.0 3.6World 5.4 2.8 0.7 5.1 4.0 3.6US 1.9 -0.3 -3.5 3.0 1.8 2.0Japan 2.4 -1.2 -6.3 4.0 -0.9 1.9EuroZone 3.0 0.4 -4.3 1.8 1.5 -0.2UK 2 7 -0 1 -4 9 1 4 1 0 0 2UK 2.7 0.1 4.9 1.4 1.0 0.2China 14.2 9.6 9.2 10.3 9.3 8.6Emerging Markets 8.9 6.0 2.8 7.3 6.3 5.9Middle East 6.7 4.6 2.6 4.4 4.0 3.4
Source: IMF, World Economic Outlook, Jadwa
2
Wh th E tt f S di A biWhy the Eurozone matters for Saudi Arabia
� A disorderly break-up of the Eurozone would cause a banking crisis similar, and possibly worse, than the collapse of Lehman.
� Greater caution by Eurozone banks will discourage them from investing o tside the regionoutside the region.
� The EU is the world’s largest economy; large auto sector and major consumer of plastics Destination of 8 5 percent of Kingdom’s total exportsconsumer of plastics. Destination of 8.5 percent of Kingdom s total exports.
� Direct exposure of companies listed on the stock market is small, but the impact on local sentiment is clearimpact on local sentiment is clear.
� A deep recession in the Eurozone will pull down oil demand and prices.
3
Oil iOil prices
140
150
110
120
130
140
80
90
100
er b
arre
l)
40
50
60
70
($ p
30
40
Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12
Brent crude WTI
4
Brent crude WTI
S di A bi il d tiSaudi Arabia: oil production
10,500
9,500
10,000
r da
y)
9,000
d ba
rrel
s pe
r
8,000
8,500
(thou
sand
7,500
Jan-
08
May
-08
Sep-
08
Jan-
09
May
-09
Sep-
09
Jan-
10
May
-10
Sep-
10
Jan-
11
May
-11
Sep-
11
5
M S M S M S M S
S di A bi G t b d tSaudi Arabia: Government budget
800
500
600
700
300
400
500
R b
illio
n)
0
100
200(S
-100
0
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Budgeted spending Budgeted revenue Balance
6
Budgeted spending Budgeted revenue Balance
S di A bi B d t d t diSaudi Arabia: Budgeted government spending
175
125
150
75
100
R b
illio
n)
25
50 (SR
0 2002 2005 2007 2009 2011 2012
Education & Manpower Health & Social Af fairs Municipal Services
Transport & Comms Water Ag & Inf rastructure
7
Transport & Comms. Water, Ag & Inf rastructure
S di A bi B d t d t l diSaudi Arabia: Budgeted versus actual spending
900
600
700
800
400
500
billi
on)
100
200
300
(SR
0
100
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Actual spending Budgeted spending
8
Actual spending Budgeted spending
S di A bi B d t d t l il iSaudi Arabia: Budgeted versus actual oil price
120
80
100
rel)
60
80
e, $
per
bar
r
20
40
(oil
pric
0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012f
B d t d A t l
9
Budgeted Actual
S di A bi A t l t fiSaudi Arabia: Actual government finances
1,200
800
1,000
400
600
R bi
llion
)
0
200
(SR
-2002004 2005 2006 2007 2008 2009 2010 2011 2012
Revenue Expenditure Budget balance
10
Revenue Expenditure Budget balance
S di A bi SAMA t f i tSaudi Arabia: SAMA net foreign assets
550
450
500
400
450
$ bi
llion
)
300
350
($
250Jan
2008May Sep Jan
2009May Sep Jan
2010May Sep Jan
2011May Sep
11
2008 2009 2010 2011
S di A bi G t d btSaudi Arabia: Government debt
700
500
600
300
400
billi
on)
200
300
(SR
b
0
100
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
12
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Comparative government debt dataComparative government debt data(Debt to GDP ratio)
250
200
100
150
perc
ent)
50
100(p
0Saudi Arabia
China UK Germany France US Italy Greece Japan
13
S di A bi B k l di t th i t tSaudi Arabia: Bank lending to the private sector
404
20
30
2
3
0
10
0
1
(per
cent
)
(per
cent
)
-10
0
-1
0
-20-2Jan 2008
May Sep Jan 2009
May Sep Jan 2010
May Sep Jan 2011
May Sep
Month on month Year on year RHS
14
Month-on-month Year-on-year - RHS
S di A bi C i l b k d it ith SAMASaudi Arabia: Commercial bank deposits with SAMA
160000
100000
120000
140000
60000
80000
100000
SR
mill
ion)
20000
40000
(S
0Jan 2007
Jul Jan 2008
Jul Jan 2009
Jul Jan 2010
Jul Jan 2011
Jul
St t t d it Oth d it ith SAMA
15
Statutory deposits Other deposits with SAMA
S di A bi I di t f diSaudi Arabia: Indicators of consumer spending
10,50070,000
7 500
8,500
9,500
55,000
60,000
65,000
)n)
5,500
6,500
7,500
45,000
50,000
(SR
mill
ion)
(SR
mill
ion
3,500
4,500
,
30,000
35,000
40,000
2,50025,000Jan 2008
May Sep Jan 2009
May Sep Jan 2010
May Sep Jan 2011
May Sep
Cash ithdra als f rom ATMs Point of sale transactions RHS
16
Cash withdrawals f rom ATMs Point of sale transactions - RHS
S di A bi I t t tSaudi Arabia: Interest rates
6
4
5
3
rcen
t)
1
2(pe
0Jan-07 Aug-07 Mar-08 Oct-08 May-09 Dec-09 Jul-10 Feb-11 Sep-11
Repo rate Reverse repo rate Three-month SAIBOR
17
Repo rate Reverse repo rate Three-month SAIBOR
S di A bi R l GDP th b tSaudi Arabia: Real GDP growth by sector
10
4
6
8
0
2
perc
ent)
-6
-4
-2
(p
-8
-6
2004 2005 2006 2007 2008 2009 2010 2011 2012f
Real non oil growth Real oil growth Real GDP growth
18
Real non-oil growth Real oil growth Real GDP growth
Saudi Arabia: Real GDP growth by sectorSaudi Arabia: Real GDP growth by sector (percent)
2008 2009 2010 2011 2012Agriculture 0.7 -0.5 1.1 2.8 1.0gManufacturing 6.0 1.5 5.3 12.4 5.2Electricity, gas and water 6.7 6.8 7.9 4.2 6.3Construction 1.5 0.6 7.8 11.6 8.0Wholesale & retail trade 6.5 2.5 8.1 6.4 4.2Transport & communication 12.2 7.4 8.0 10.1 7.0Finance 2.4 2.6 1.6 2.7 3.3Non-oil private sector 4.6 2.7 5.3 8.3 5.8Oil 4.3 -8.8 2.2 4.3 -3.8G t i 2 4 5 0 5 3 6 2 6 7Government services 2.4 5.0 5.3 6.2 6.7Total 4.2 0.1 4.6 6.8 3.3
19
S di A bi I fl tiSaudi Arabia: Inflation
10
7
8
9
5
6
erce
nt)
2
3
4(p
0
1
2004 2005 2006 2007 2008 2009 2010 2011f 2012f
20
2004 2005 2006 2007 2008 2009 2010 2011f 2012f
S di A bi F d i i fl tiSaudi Arabia: Food price inflation
50
60
16
18
30
40
50
12
14
16
0
10
20
6
8
10
(per
cent
)
(per
cent
)
-30
-20
-10
0
2
4
-40-2Jan
2006Jul Jan
2007Jul Jan
2008Jul Jan
2009Jul Jan
2010Jul Jan
2011Jul
Saudi food price inf lation Global food price inf lation (FAO index; RHS)
21
Saudi food price inf lation Global food price inf lation (FAO index; RHS)
S di A bi R t l i fl tiSaudi Arabia: Rental inflation
20
14
16
18
8
10
12
per
cen
t)
4
6
8(p
0
2
Jan 2007
May Sep Jan 2008
May Sep Jan 2009
May Sep Jan 2010
May Sep Jan 2011
May Sep
22
2007 2008 2009 2010 2011
S di A bi I fl ti b kdSaudi Arabia: Inflation breakdown
14
8
10
12
4
6
8
erce
nt)
0
2
(pe
-2Jan
2009Apr Jul Oct Jan
2010Apr Jul Oct Jan
2011Apr Jul Oct
Education and entertainment Clothing and footwear Home furniture
23
Education and entertainment Clothing and footwear Home furniture
L b k tLabor market
� Regional tensions have made job creation a higher priority.
� Total Saudi unemployment was 463,000 in 2009 (unemployment rate 10.5 percent). Around 700,000 people have qualified for unemployment benefit.
� Labor force participation is very low among Saudis, at 36.4 percent; 60.8 percent for males and 12 percent for females. The average labor force participation rate across the world is 77 percent for women it is 41 percentparticipation rate across the world is 77 percent, for women it is 41 percent.
� There were 113,496 net new Saudi entrants to the labor force in 2009. Of these 40 percent were womenthese, 40 percent were women.
� Expatriates hold 6.2 million jobs in the private sector, 89 percent of the total. There are 13 times more expatriates in the private sector than unemployed p p p ySaudis.
24
L b k tLabor market
� Average monthly wages: Saudis, SR5,868, Expatriates, SR1,549; unemployment benefit SR2,000; minimum public sector salary SR3,000.
� Education and skills of many nationals has improved, with record numbers st d ing abroad b t still not aligned ith the pri ate sector req irementstudying abroad, but still not aligned with the private sector requirement.
� Changing the profile of the labor force will entail some costs for the private sectorsector.
� Strong enforcement essential for Nitaqat to be successful.
� The private sector will remain dominated by expatriates. The government can afford to increase the public sector workforce.
25
S di A bi D ti tiSaudi Arabia: Domestic energy consumption
4.0
3.0
3.5
vale
nt/d
ay)
2.0
2.5
of o
il eq
uiv
1.0
1.5
on b
arre
ls o
0.0
0.5
1970 1974 1978 1982 1986 1990 1994 1998 2002 2006 2010
(mill
io
26
S di A bi D ti iSaudi Arabia: Domestic energy prices
Utility pricesGas ($/mbtu) 0.75Gas ($/mbtu) 0.75Gasoline ($/gallon) 0.48Electricity ($/kW) 0.013-0.07Water ($/m3) 0.03
Prices paid by domestic consumers for oil($ per barrel)Saudi Electricity 2.7-4.3Gasoline retailers 18Gasoline retailers 18Cement companies 4.2
27
Energy efficiencyEnergy efficiency (barrels of oil equivalent per day to generate $1,000 of GDP)
14
10
12
6
8
2
4
01988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008
Saudi Arabia China World
28
Saudi Arabia China World
Source: Ministry of Petroleum and Minerals
S di A bi Oil d tiSaudi Arabia: Oil production
12
8
10
ay)
6
8
rrel
s pe
r da
2
4
(mill
ion
bar
0
2
1970 1974 1978 1982 1986 1990 1994 1998 2002 2006 2010
(
29
Saudi Arabia: Outlook for oil consumption and exportsSaudi Arabia: Outlook for oil consumption and exports(forecasts in shaded area)
8
5
6
7
er d
ay)
3
4
5
n ba
rrel
s pe
1
2
3
(mill
ion
0 2002 2006 2010 2014 2018 2022 2026 2030
Exports Domestic consumption
30
Exports Domestic consumption
Saudi Arabia: Projected breakeven oil priceSaudi Arabia: Projected breakeven oil price(Saudi export crude; forecasts in shaded area)
350
250
300
150
200
barr
el)
100
150
($ p
er b
0
50
2002 2006 2010 2014 2018 2022 2026 2030
31
2002 2006 2010 2014 2018 2022 2026 2030
C l iConclusion
� 2012 will be a difficult year for the global economy, with the Eurozone the main area of concern.
� High government spending will be the main source of economic growth in the Kingdom This spending is affordablethe Kingdom. This spending is affordable.
� Higher bank lending and low interest rates will support solid non-oil growth. Total growth will be affected by lower oil productionTotal growth will be affected by lower oil production.
� External pressures will allow inflation to moderate, though some domestically-driven price pressures will increasedomestically driven price pressures will increase.
� Short-term risks are external; the global economy and the regional political situation. Structural problems with the labor force and rapidly growing p p y g genergy consumption are long-term term concerns.
32
S di A bi K d t d f tSaudi Arabia: Key data and forecasts2004 2005 2006 2007 2008 2009 2010 2011E 2012F 2013F
Nominal GDP(SR billion) 938.8 1182.5 1335.6 1442.6 1786.1 1412.6 1690.5 2163.1 2065.3 2136.2($ billion) 250.3 315.3 356.2 384.7 476.3 376.7 450.8 576.8 550.7 569.6(% change) 16.7 26.0 12.9 8.0 23.8 -20.9 19.7 28.0 -4.5 3.4(% change) 16.7 26.0 12.9 8.0 23.8 20.9 19.7 28.0 4.5 3.4
Real GDP (% change)Oil 6.7 6.2 -0.8 -3.6 4.2 -7.8 2.4 4.3 -3.8 2.8Non-oil private sector 5.3 5.8 6.1 5.5 4.6 2.7 5.3 8.3 5.8 5.5Non-oil government 3.1 4.0 3.1 3.0 3.7 5.2 5.9 6.7 6.2 6.2Total 5.3 5.6 3.2 2.0 4.2 0.1 4.6 6.8 3.3 4.9
Oil indicators (average)Oil indicators (average)WTI ($/b) 41.5 56.6 66.0 72.3 99.7 62.0 79.5 94.8 86.0 84.0Saudi ($/b) 34.7 49.5 60.5 68.1 93.4 60.5 77.7 105.0 92.0 86.5Production (million b/d) 8.9 9.4 9.2 8.8 9.2 8.2 8.2 9.3 8.8 9.0
Budgetary indicators (SR billion)Government revenue 392 564 674 643 1101 510 742 1110 824 784Government expenditure 285 346 393 466 520 596 645 804 733 770Budget balance 107 218 280 177 581 -87 97 306 91 14(% GDP) 11.4 18.4 21.0 12.2 32.5 -6.1 5.7 14.1 4.4 0.7Domestic debt 614 475 366 267 237 225 167 136 115 100(% GDP) 65.4 40.2 27.4 18.5 13.3 15.9 9.9 6.3 5.6 4.7
Monetary indicators (average)Inflation (% change) 0.3 0.7 2.3 4.1 9.9 5.1 5.3 4.9 4.4 4.0SAMA base lending rate (%, end year) 2.50 4.75 5.20 5.50 2.50 2.00 2.00 2.00 2.00 2.00SAMA base lending rate (%, end year) 2.50 4.75 5.20 5.50 2.50 2.00 2.00 2.00 2.00 2.00
External trade indicators ($ billion)Oil export revenues 110.4 161.6 188.2 205.3 281.0 163.1 214.9 302.4 227.8 200.0Total export revenues 125.7 180.4 210.9 233.1 313.4 192.2 251.0 343.2 271.0 248.5Imports 41.1 53.8 63.0 81.5 100.6 86.4 96.7 98.7 110.5 123.8Trade balance 84.6 126.6 147.8 151.6 212.7 105.8 154.3 244.5 160.5 124.7Current account balance 51.9 90.0 98.9 93.3 132.3 21.0 67.0 159.5 80.6 41.5(% GDP) 20 7 28 5 27 8 24 3 27 8 5 6 14 9 27 6 14 6 7 3
33
(% GDP) 20.7 28.5 27.8 24.3 27.8 5.6 14.9 27.6 14.6 7.3Official foreign assets 127.9 195.5 273.4 359.8 502.0 474.2 520.3 634.8 695.3 728.3
Social and demographic indicatorsPopulation (million) 22.7 23.4 24.1 24.8 25.5 26.3 27.1 27.9 28.8 29.7Unemployment (male, 15+, %) 11.0 11.5 12.0 11.0 9.8 10.5 10.2 11.0 10.5 9.4GDP per capita ($) 11039 13503 14806 15523 18651 14311 16612 20651 19122 19190