S&P affirms Saudi Arabia's rating on economic prospects

S&P Global Ratings affirmed Saudi Arabia’s 'A-/A-2' sovereign credit rating with a stable outlook thanks to the country’s strong net asset positions and its economic prospects over the next three years.

The kingdom, the biggest Arab economy, is currently facing economic headwinds like other oil-producing countries due to the twin shocks of the pandemic and lower oil prices, the rating agency said in a report released on Sunday. However, from 2021 onward, the country’s gross domestic product is expected to rebound as oil prices and the volume of its energy exports climb.

“The sovereign's sizable fiscal and external buffers should help enable [the kingdom] to weather it [the lean] period,” S&P’s primary credit analyst Ravi Bhatia said.

“The economy should begin to rebound from 2021 on, as global [economic] conditions improve.”

The stable outlook of Opec’s top oil exporter reflects continued ratings support from the kingdom’s “relatively strong government and external balance sheets”.

While Saudi Arabia’s real GDP is estimated to contract 4.5 per cent this year due to the pandemic and the related economic challenges, it is expected to grow, averaging 2.4 per cent over the 2021-23 period, the agency said.


Source: The National