Business Monitor International


Saudi Arabia Business Forecast Report

Published 26 August 2014

  • 55 pages
  • Instant access to your report online and PDF format through your account library
  • Includes 3 free updated quarterly reports
 
$1,195.00
Saudi Arabia Business Forecast Report

Core Views

  • Continued heavy spending on the part of the government indicates its ongoing concerns about the need to shore up its key bases of support, given the persistent threat of public unrest. While we maintain that large-scale protests are unlikely to occur in Saudi Arabia, large youth unemployment coupled with a lack of political liberties mean that tensions will continue to linger.

  • Saudi Arabia's economic performance will remain largely insulated from the recent decline in international oil prices. We do not expect the government's expansionary fiscal policy to change significantly over the coming quarters, and public spending will continue to support both private consumption and fixed investment.

  • We forecast real GDP growth of 3.6% in 2015, a slight moderation from an estimated 4.3% in 2014 due to the normalisation of domestic oil production.

  • Developments in Egypt, Syria and Iran have disrupted relations between Saudi Arabia and its traditional ally, the United States. Although we expect the alliance to remain firm over the coming years, we note that Riyadh's foreign policy risks have increased, with the prospect of a US-Iran détente presenting a particular quandary to Saudi policymakers.

Key Risks To Outlook

  • The government's recent intensification of workforce nationalisation efforts (under a programme known as 'Saudisation') poses a downside risk to the economic outlook. We expect heightened 'Saudisation' measures to add to the costs for the private sector over the coming quarters, leading to an increase in project delays and a more difficult business environment overall.

  • Recent developments in Yemen deepen the security challenges confronting Saudi Arabia and the rest of the Gulf Cooperation Council. While not our core scenario, we see a growing risk that Riyadh will intervene militarily in Yemen in the coming years if cross-border security conditions deteriorate further.

  • A sharper-than-expected downturn in the global economy, if it...

Table of Contents

Executive Summary
5
Core Views
5
Key Risks To Outlook
5
Chapter 1: Political Outlook
7
SWOT Analysis
7
BMI Political Risk Ratings
7
Domestic Politics
8
Succession Risks Allayed For Now
8
TABLE: POLITICAL OVERVIEW
8
Foreign Policy
9
Struggling To Respond To Iran's Diplomatic Reach
9
TABLE: RECENT LEADERSHIP CHANGES
9
TABLE: POSSIBLE SCENARIOS FOR IRAN AS DIPLOMACY ADVANCES
10
Long-Term Political Outlook
12
Scenarios For The Coming Decade
12
Chapter 2: Economic Outlook
15
SWOT Analysis
15
BMI Economic Risk Ratings
15
Economic Activity I
16
Remaining A Regional Outperformer
16
table: Economic Activity
16
TABLE: BMI AND BLOOMBERG CONSENSUS FORECASTS FOR BRENT, Q114-2016 (USD/BBL)
17
Economic Activity II
19
Buoyant GCC Growth To Continue Over H214
19
TABLE: REAL GDP GROWTH, %
19
Monetary Policy
20
Restrained Inflation Conditions To Continue
20
TABLE: Consumer Price Inflation
20
Banking Sector
21
Banking Sector: Growth Dynamics Remain Strong
21
TABLE: TOP LISTED BANKS' NET PROFIT (SARbn )
21
Chapter 3: 10-Year Forecast
23
The Saudi Arabian Economy To 2023
23
Politics Main Risk To Long-Term Outlook
23
TABLE: Long-Term Macroeconomic Forecasts
23
Chapter 4: Business Environment
25
SWOT Analysis
25
BMI Business Environment Risk Ratings
25
Business Environment Outlook
26
Institutions
26
TABLE: BMI Business And Operation Risk Ratings
26
table : BMI Legal Framework Rating
27
Infrastructure
28
Market Orientation
29
Table: Labour Force Quality
29
TABLE: MENA - Annual FDI Inflows
30
Operational Risk
31
table: Trade And Investment Ratings
31
TABLE: Top Export Destinations
32
Chapter 5: Key Sectors
33
Defence
33
TABLE: Defence Expenditure
34
TABLE: Rail Freight
39
Other Key Sectors
41
table : Telecoms Sector Key Indicators
41
table : Autos Sector Key Indicators
41
table : Pharma Sector Key Indicators
41
table : Oil and Gas Sector Key Indicators
42
table : Infrastructure Sector Key Indicators
42
table : Food and Drink Sector Key Indicators
42
Chapter 6: BMI Global Assumptions
43
Global Outlook
43
Growth Increasingly Polarised
43
Table: Global Assumptions
43
Table : Developed States , Real GDP Growt H, %
44
Table : BMI VERSUS BLOOMBERG CONSENSUS REAL GDP GROWTH FORECASTS, %
44
Table : Emerging Markets , Real GDP Growth , %
45

The Saudi Arabia Business Forecast Report helps businesses with market assessment, strategic planning and decision making to promote growth and profitability in Saudi Arabia and is an essential tool for CEOs, Chairmen, Finance Directors/CFOs, Managing Directors, Marketing/Sales Directors with commercial interests in this emerging market.

An influential new analysis of Saudi Arabia's economic, political and financial prospects through end-2018, just published by award-winning forecasters, Business Monitor International (BMI).

Key Uses

  • Forecast the pace and stability of Saudi Arabia's economic and industry growth through end-2018.
  • Identify and evaluate adverse political and economic trends, to facilitate risk mitigation.
  • Assess the critical shortcomings of the business environment that pose hidden barriers and costs to corporate profitability.
  • Contextualise Saudi Arabia's country risks against regional peers using BMI's country comparative Risk Rankings system.
  • Evaluate external threats to doing business in Saudi Arabia, including currency volatility, the commodity price boom and protectionist policies.

The Saudi Arabia Business Forecast Report by Business Monitor International (BMI) includes four major sections: Economic Outlook, Political Outlook, Business Environment and Key Sector Outlook.

Economic Outlook:

How will the Saudi Arabia economic policy-making and performance impact on corporate profitability over 2014-2018?

BMI provides our fully independent 5-year forecasts for Saudi Arabia through end-2018 for more than 50 economic and key industry indicators. We evaluate growth, and also forecast the impact of economic management.

Economic Outlook Contents

The Saudi Arabia Business Forecast Report features BMI's forecasts with supporting analysis for 2014 through to end-2018, set against government views and BMI's evaluation of global and regional prospects.

Key Areas Covered:

Data:

  • Full 10-year forecasts with data - for key macroeconomic variables including GDP (real growth and per capita), population, inflation, current account balance and the exchange rate.
  • BMI's comprehensive Risk Rankings system - rates each country worldwide for economic and political risk, and rates the business environment, within a global and regional context.

Written Analysis:

  • Economic Activity - real GDP growth, employment, inflation, consumption (retail sales and confidence).
  • Balance of Payments - trade and investment, current and capital account.
  • Monetary Policy - interest rate trends (bank lending and deposit rates) and inflation (producer price and consumer price).
  • Exchange Rate Policy - currency controls, foreign investment flows, exchange rates and foreign exchange reserves.
  • Fiscal Policy - macroeconomic strategy and policies, government finance and tax reforms.
  • Foreign Direct Investment - approvals, inflows and climate.
  • External Debt - debt profile (short and long-term plus public and private sector exposure).
  • Global Assumptions - forecasts for each year to end-2018 covering: major commodities, growth in key regions, inflation, and interest and exchange rates, in the United States, Japan, China and the eurozone.

Key Benefits

  • Rely upon BMI's 100% independent forecast scenarios for Saudi Arabia and underlying assumptions - we take no advertising and are privately-owned.
  • Exploit the benefits of BMI's comprehensive and reliable macroeconomic database on Saudi Arabia, sourced and fully maintained by BMI from an extensive network of private sector, government and multilateral contacts.
  • Gain key insights into the current and future direction of government economic policy, which could significantly affect your company's business prospects, from BMI's team of analysts and economists.

Political Outlook:

What are the political risks to doing business in Saudi Arabia over the next 5-years?

BMI's Saudi Arabia country Risk Rankings evaluate the short- and medium-term threats to political stability.

Political Outlook Contents

  • SWOT Analysis for the Saudi Arabia Market - Political Strengths, Weaknesses, Opportunities and Threats facing Saudi Arabia.
  • Political Stability and Risk Assessment - BMI's Risk Rankings assess explicit short- and long-term risks to political stability; latest ankings, rankings and trends for Saudi Arabia's risk are compared with regional and global averages.
  • Current Administration and Policy-making BMI assesses the threats to the continuity of economic policy, and likely changes to the business operating environment.

Key Benefits

  • Benchmark Saudi Arabia's risk profile against its neighbours, the global and regional average, allowing easy comparison of risks between key business markets.
  • Identify, evaluate and anticipate political and security risks to the business environment, and to your company's current operations and future plans.
  • Gain valuable insights into government and policy-making, through BMI's specialist team of analysts and economists, and their network of private and public sector sources.

Business Environment

Business Environment Risk Rankings with SWOT Analysis - Business Environment Risk Rankings for Saudi Arabia, benchmarked against rankings for regional neighbours.

Country Competitiveness - Competitiveness of Saudi Arabia's business operating environment in supporting corporate growth and profitability, compared with regional neighbours.

Business Environment Contents

  • Domestic Environment - Transparency, cronyism and corruption; labour market flexibility; corporate tax burden; interest rate levels; sophistication of banking sector and stock market; levels of business confidence; infrastructure and IT.
  • Foreign Direct Investment - Analysis of foreign investment regime; foreign ownership laws; attractiveness of business environment to foreign investors.
  • Foreign Trade - Analysis of trading environment, government trade policy, liberalisation measures, tariffs and membership of trade areas.

Key Benefits

  • Assess your company's evolving exposure to country specific operational and business risks, using BMI's in-depth analysis of the legal and regulatory business environment.
  • Understand your market's comparative strengths and weaknesses in the key areas of commercial infrastructure and business institutions, using BMI's proprietary global Business Environment Risk Rankings.

Key Sector Outlook

Which industry sectors in Saudi Arabia will grow fastest, and where are the major investment opportunities in the market?

BMI's identifies investment opportunities in Saudi Arabia's high growth industries including automotives, defence & security, food & drink, freight transport, infrastructure, oil & gas, pharmaceuticals & healthcare and telecommunications & IT.

Key Areas Covered:

  • Market Overview - Size and value of each industry with developments over 2009-2013, covering major industry key performance indicators (KPIs) that have impacted company performance.
  • 5-year Industry Forecasts - Forecasts for each year over 2014-2018, using BMI's proprietary industry modeling technique, which incorporates all key domestic and international indicators - including economic growth, interest rates, exchange rate outlook, commodity prices and demographic trends - to provide fully integrated forecasts across, and within, each industry.
  • Demand- and Supply-Side Data/Forecasts - BMI's industry data covers both the output of each industry and the domestic demand, offering clear analysis of anticipated import/export trends, as well as capacity growth within each industry.

Key Benefits

  • Target strategic opportunities in high growth industries, which are benefiting from global mega trends, and thus offer strong investment and growth opportunities.
  • Compare the growth path of different industries to identify which are best placed to benefit from domestic and international economic prospects, and which have historically suffered from volatile growth trends - a key indicator of future risks.

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Testimonials

The sections that I find most interesting and useful are the macroeconomic data and forecasts for the country, top export destinations and economic activity. The indicators/analysis of these areas helps us orient our thinking, our assumptions and, consequently, our decisions in the commercial area.

Country Manager, DHL Express