A recently released Reuters poll of economists finds that non-oil business activity is slowing in the Gulf because of government austerity measures, causing some to revise their economic forecasts down for the region.
In 2015, growth in the GCC “began to lose steam as governments reduced spending to limit big budget deficits caused by cheap oil,” Reuters said. “This year, those austerity measures – including cuts to energy price subsidies, smaller bonuses for state employees, and higher taxes and fees – are starting to make a major dent in consumers’ income, slowing economies further.”
The National Transformation Program is part of Vision 2030.
The median prediction for GDP growth in Saudi Arabia this year was lowered to 1.2 percent from 1.5 percent in the last Reuters poll, conducted in April, the global news service said, adding that growth in 2017 is now expected to be 1.7 percent instead of 1.9 percent.
First-quarter Saudi GDP data, released by the government earlier this month, showed the non-oil sector shrank 0.7 percent from a year earlier, its worst performance in at least five years.
Saudi Arabia is betting big on plans to more than triple its nonoil revenue by 2020 while cutting state handouts and subsidies. The Kingdom’s recently launched Vision 2030 and National Transformation Plan are part of the ambitious designs of the Saudi government to move its economy beyond oil.
