Andersen

Considering todays current oil prices, it is obvious that Saudi Arabia will be experiencing budget deficit for 2024. After enjoying a rare budget surplus in 2022, and despite the recorded surplus trade balance of 113.1 USD billions in Dec 2023. The situation in 2024 is completely different as most Gulf Cooperation Council (GCC) economies are seeing their budget larger deficits widen with current oil prices still well below what they require to balance their budgets. With today’s current crude oil prices of $70 per barrel, it will be highly unlikely for any of the GCC countries to avoid deficits of their 2024 budgets.

According to the IMF, Saudi Arabia, the biggest economy of the Middle and the GCC, should have received an average of $96 of each barrel its crude oil price exported to avoid deficit budget. Although the difference between the actual and projected budgeted selling price of a barrel of crude oil is big, the expected deficit budget is not going to be wide to stop the giant development plans related to the Kingdom 2030 vision the country is pursuing. Such situation is related to the fact that over the past three years, the oil-rich nation has been the first to take the burden of OPEC production cuts, which led to decrease of revenue generated from crude oil export. The is that Saudi Arabia current production is little less than 9 million barrels per day. The Kingdom production is the lowest since 2011. The double reason is the Kingdom is exporting fewer barrels at lower prices, that resulted in less revenue than it was previously budgeted

That said, in my opinion, The Kingdom could still afford to avoid the short-fall of deficit the oil markets have created. I still believe the Kingdom of Saudi Arabia can reorganize and extend the time frams of implementation for some of its Vision 2030 programs. The second alternative is to look for other options of funds to weather a period of lower prices, including tapping foreign exchange reserves or issuing government long term debt instrument.

As the result of reasons, I indicated above, exports in Saudi Arabia decreased by 5.8% year-on-year to SAR 87.9 billion in June 2024, weighed by lower sales of oil products (-9.3%), accounting for 75.4% of total exports. Meanwhile, non-oil exports rose by 0.5% primarily driven by increased sales of chemical products (3.8%) and plastics, rubbers & their products (2.8%). source: General Authority for Statistics, Saudi Arabia

Major Key Indicators of Saudi Export:

• Saudi Arabia Total Exports recorded 23.4 USD bn in Jun 2024, compared with 28.1 USD bn in the previous month.
• Saudi Arabia Total Exports data is updated monthly, available from Jan 2015 to Jun 2024, with an averaged value of 21.5 USD bn.
• The data reached an all-time high of 39.2 USD bn in Jun 2022 and a record low of 10.0 USD bn in May 2020.

For further analysis, goods exports decreased by 5.7% in Q1 2024 compared to Q1 2023, due to an 8.3% decrease in oil exports, thus the share of oil exports in total exports decreased from 78.2% in Q1 2023 to 76.1% in Q1 2024.

Saudi Exports & Imports Statistics for July 2024

Source: The General Authority for Statistics (GASTAT):

To conclude, the second quarter of 2024 statistics of exports and imports indicated that Kingdom of Saudi Arabia non-oil exports showed an increase of 10.5% during Q2 of 2024 compared to the same period during the year 2023. The Kingdom non-oil exports, excluding re-exports, have showed an increase by 1.4% compared with same period of 2023. At the same time the value of re-exported goods rose up by 39.1% for the same period compared with last year.

Regarding the value of non-oil exports, including re-exports, showed an increase by 4.3%. While Merchandise exports slipped by 0.2% during Q2 of 2024 compared to Q2 2023. In the meantime, the Kingdom value of imports deceased by 5.6% as the result of the decrease of 3.3% in oil exports. Thus, the percentage of oil exports in total exports declined to 75% from 77.4% in Q2 2023.

While imports increased by 3% and the surplus of the merchandise trade balance declined by 6% for period compared to Q2 2023. At the time, the value of merchandise exports remained the same in the Q2 of 2024 comparing it to Q1 2024. As for the value of imports declined by 5.6%, while the surplus of the merchandise trade balance recorded an increase of 13.2%