The kingdom has been hit hard by the coronavirus pandemic and falling oil prices among other challenges
Middle East Eye: Saudi Arabia has been trying to diversify its economy for decades, as emphasised in Vision 2030, launched by Crown Prince Mohammad Bin Salman.
But the the dual shocks of coronavirus and tumbling energy prices have hurt its plans, particularly in the non-oil sector, which is forecast to contract by 14 percent this year.
For your average citizen in Saudi Arabia, that means only one thing - more belt tightening. These are the key threats.
1. Saudi Arabia can no longer rely on oil
Oil revenues account for around two-thirds of the kingdom’s exports. But while Saudi Arabia was once responsible for nearly 30 percent of global oil exports, that figure has now dropped to just 12 percent, according to Capital Economics.
Riyadh started a price war in March in an apparent bid to damage rival producers, even as global demand was sinking due to Covid-19. It flooded the market, but in doing so saw its crude export revenues dropped by 65 percent compared to April 2019. “The sharp decline in oil prices, exacerbated by demand loss from the pandemic, has hit Saudi Arabia particularly hard,” said Boris Ivanov, founder and managing director of consultancy GPB Global Resources.
Prices have recovered since to about $44 a barrel – but that is still well below the $77.6 a barrel that the kingdom needs to balance its budget. Nor is there any sign that it will return to those levels.
Nor is the global outlook positive: demand is projected to fall “by 8.1 million barrels a day, the largest in history” because of Covid, according to the International Energy Agency (IEA). Looking forward, the organisation predicts that demand will peak by 2030 due to the rise in renewable energy.
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