Saudi Arabia's economy contracted for the first time in nearly a decade last year, when the private sector was hit by headwinds. Companies are struggling with higher electricity and fuel prices and a 5% VAT rate introduced at the beginning of the year. Unemployment, which was just over 12 percent last summer, is at its highest level in a decade.
And new quotas and fees for foreign workers have triggered an exodus of more than 900,000 rural emigrants in the last two years. As a result, the labor market has shrunk and left gaps that the local population, lacking vital skills and training, still can not fill, say analysts and executives.
Saudi officials said they are now rethinking foreign workers' fees between $ 80 and $ 1
In September, a pre-budgetary statement announced increases in domestic energy prices and more than 7 percent in spending in 2019 to limit unemployment and support growth. However, this happened at a time of bullish oil price forecasts, which have fallen 30 percent in the last three months. And despite an OPEC production decision of 1.2 million barrels by January, prices will continue to come under pressure thanks to slowing global demand and booming US shale production.
As long as oil prices remain at their current lows, they stimulate growth Jean-Paul Pigat, Head of Research at the consulting firm Lighthouse Research in Dubai and a former economist at Emirates NBD. "19659002]" Weak growth and high unemployment are the priorities today, "Pigat told CNBC." It will certainly increase the budget deficit, but that is a concern that can be tackled in many years. "