Saudi 2025 budget projections, non-oil trade, monetary stats. Oman FDI.
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Weekly Insights 29 Nov 2024: OPEC+ voluntary oil cuts drag down Saudi Arabia’s export & government revenues
1. Saudi Arabia’s 2025 budget forecasts a narrower deficit of SAR 101bn (or 2.3% of GDP) from an estimated SAR 115bn deficit (2.8% of GDP) in 2024
- Saudi Arabia’s fiscal balance is forecast to narrow to a deficit of SAR 101bn in 2025 (or 2.3% of GDP), following an estimate of a SAR 115bn deficit in 2024 (2.8% of GDP). This stems from a 3.7% yoy drop in revenues but with a faster 4.5% decline in expenditures (vs 2024 estimates).
- The share of tax revenues is expected to increase to 32% of the total next year, from just under 30% in 2023 and 2024. Among taxes, goods and taxes will account for the lion’s share (81.2% in 2025 from 78.4% in 2024).
- Opex is projected to account for 85.7% of overall spending in the 2025 budget; within opex, compensation of employees will account for the largest share (49%). Capex is budgeted to drop by 7.1% yoy to SAR 184bn.
- Public debt will rise gradually, up 8.4% yoy to SAR 1.3trn in 2025 (or 29.9% of GDP) from an estimated SAR 1.199trn in 2024 (or 29.3% of GDP).
- There has been anecdotal evidence of spending reviews, with the Kingdom prioritizing more strategic projects over others.
- The Finance Minister confirmed that projects such as NEOM will take decades to be completed; however, venues for hosting large sporting events and the Expo 2030 have shorter time frames for completion and will require accelerated spending to meet set deadlines.
- The Minister also stated that local and international financing will be tapped to cover deficits and meet debt obligations.
2. Saudi Arabia’s trade surplus narrowed to SAR 59.2bn in Q3 2024, the lowest since end-2020
- Saudi Arabia’s overall exports fell by 7.7% yoy to SAR 276.5bn in Q3 – due to the drop in oil exports (-14.9% yoy) while non-oil exports grew (by 7.6% yoy to SAR 56.8bn) and re-exports surged by 48.4%. Similar trends were seen when compared to Q2: exports and oil exports fell by 6.4% qoq and 10.8% respectively in Q3.
- Share of oil exports to overall exports stood at 71.3% in Q3, the lowest since Q1-2021.
- Imports expanded in Q3, up by 4.3% qoq and 11.4% yoy to SAR 217.3bn. This resulted in trade surplus narrowing to SAR 59.2bn (Q2: SAR 87.1bn & SAR 104.6bn from a year ago).
- Unsurprisingly, China continues to be the top destination for oil exports; top 5 nations accounted for 52% of total oil exports & top 25 for 88% of the total in Sep.
- Saudi Arabia’s non-oil trade with the GCC is led by a surge in re-exports.
- There was a 52.3% yoy surge in re-exports to GCC in Q3 (re-exports to UAE almost doubled) leading to non-oil exports up 27.7%.
- UAE was the largest trade partner within the GCC, running a surplus of SAR 9.8bn in Q3. Deficits were recorded with Oman and Bahrain in Q3, and it widened for the latter. Surpluses with Kuwait and Qatar narrowed.
3. Govt deposits in Saudi Arabia plunged to the lowest since Jun 2007 – down by 12.1% mom in Oct. Credit & deposits grew by an average 10.9% and 9.0% respectively till Oct this year, with claims on public sector outpacing private after 12 months of the reverse. Net foreign assets fell to SAR 1.53trn (lowest since Feb 2024)
4. FDI into Oman grew by 17.4% yoy to OMR 25.98bn at end-Q2 2024: oil & gas sector attracted the most investment, while UK was the largest investor
- The volume of FDI in Oman clocked in at OMR 25.98bn at end-Q2 2024, was up 17.4% yoy.
- The most popular sectors that attracted FDI were oil and gas exploration, manufacturing, financial intermediation and real estate which together accounted for 95.4% of the total. Among the sectors, the fastest growth in Q2 was recorded in manufacturing (+45% yoy) while the utilities sector posted a decline compared to a year ago.
- The UK topped the list countries with FDI in Oman (OMR 13.2bn) followed by the US (OMR 5.1bn) and UAE (OMR 856.6mn). Regional investment seems to be strong, with UAE, Kuwait, Qatar and Bahrain accounting for 10% of the FDI in Oman. The fastest growth was seen in FDI from US (+36.2% yoy) and India (32.4%) while that from China plunged (-35.4%).
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