Riyadh - Mubasher: Capital Economics said in a report on Wednesday that the continuous improvement in Saudi Arabia’s current has resulted in alleviating fears regarding the devaluation of the Saudi riyal.
Despite the fact that a bigger part of the improvement is attributed to weaker imports and to the decrease in money transfers abroad, still it reflects the collateral damage the austerity measures have made on the economy, the research firm added.
The data from the kingdom’s balance of payments showed a surplus in the current account by $1.1 billion in the second quarter of 2017, while in 2016 the current account suffered a deficit of over 10% relative to the nation’s gross domestic product (GDP).
The report further noted that the delay in infrastructure projects has caused a decrease in foreign labour hired by big companies in Saudi Arabia, which led to lower money transfers to outside the kingdom by 2% relative to the nation’s GDP.
It is important to maintain the Saudi current account’s current levels as oil prices are not expected to increase, Capital Economics said, forecasting that Brent crude prices will reach around $55 per barrel next year.
The report concluded that it was unlikely that more concerns regarding the Saudi currency’s devaluation would arise.
