Country Economic Forecasts > Saudi Arabia

OPEC led by Saudi Arabia surprised the markets and agreed to cut output by 1.2mbd to 32.5mbd at the Vienna meeting which has underpinned a rise in the oil price well above US$50pb. Although we remain sceptical of the deal's longer-term success, we do expect Saudi to implement its share of cuts in H1 next year and have revised down our forecast for oil GDP growth in 2017 to -0.9% as a result. Meanwhile, however, there are signs that Octobers US$17.5bn international bond issue has brought forth an easing in liquidity pressures already and increased economic optimism, with interbank rates having fallen, the government making substantial repayments to contractors and Novembers PMI ticking up. But with oil prices low and fiscal consolidation continuing to be implemented, we still forecast non-oil GDP up a modest 1.5% next year after a small contraction in 2016. This will leave overall GDP growth at just 0.5% in 2017 versus 1.6% this year.