Non-Saudi households are expected to decrease their spending in the kingdom by 13.5 percent over the period 2017-2020, according to a new report published on Sunday.
Recent economic reforms in the kingdom, from value-added-tax (VAT) and dependent fees, to raising energy and utility prices, will push non-Saudi households to lower their spending from SAR 192 billion ($51.2 billion) in 2017 to SAR 166 billion in 2020, according to Al Rajhi Capital.
The majority of Saudi households, on the other hand, will be shielded from the impact of these reforms, the report adds. Saudi nationals will benefit from support from the Saudi Citizen Account program, which aims to offset the increase in the cost of living for low-to-middle income families. (Read more here)
Saudi household spending is forecast to grow 8.2 percent from SAR 750 billion in 2017 to SAR 811 billion in 2020, according to the Al Rajhi report, especially as an additional support system for citizens, the “Cost of Living Allowance”, is expected to roll out in 2018. (Read more here)
Overall consumer spending is forecast to rise by a modest 3.8 percent over the period, but Al Rajhi Capital estimates that without the introduction of recent reforms the increase would have been 9 percent.
Saudi Arabia is expected to see higher economic growth this year, as a result of stronger oil prices, but inflation is accelerating on the back of new taxes and reforms that came into effect over the past few months. Earlier in January, the International Monetary Fund raised its growth forecasts for Saudi Arabia in 2018 to 1.6 percent, from a previous estimate in October of 0.5 percent. (Read more here)
(Reporting by Nada Al Rifai; Editing by Shane McGinley)
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