JEDDAH: Standard and Poor’s Rating Agency depended on temporary and unsustainable factors when it downgraded the Kingdom’s credit rating, top Saudi economists have told Arab News Business Dialogue in Jeddah.
The Saudi economy has grown strongly in the last five years and is set for further healthy performance despite the grim global economic outlook and the decline in oil prices, said Sami A. Al-Nwaisir, chairman of Al-Sami Holding Group.
He made these remarks during the dialogue themed ‘S&P Evaluation of KSA Economy: Is It Backed by Reality?’
Fahad Alturki, chief economist and head of research, Jadwa Investment, pointed out that the latest rating assessment by S&P is focused more on the decline in oil prices and its implication on the fiscal account over the coming few years while less attention has been paid to other economic fundamentals. This was somewhat expected based on S&P methodology and previous assessments and the agency's view on the Saudi fiscal account, he said.
Similar views were expressed by other economic experts based in the Kingdom. They included Said Al-Shaikh, group chief economist at the National Commercial Bank (NCB); Fawaz Alfawaz, Riyadh-based economic consultant; Basil Al-Ghalayini, CEO of BMG Financial Group; John Sfakianakis, Middle East director at Ashmore Group; Jordi Rof, economist at Asiya Investments and Akber R. Naqvi, executive director at Al-Masah Capital.
In his remarks, Al-Ghalayini questioned the credibility of these rating agencies, especially after their misleading performance in the subprime crisis. “S&P should have done its homework before coming up with these premature conclusions,” he said.
In spite of oil prices fluctuations and budget deficit, the Saudi economy’s fundamentals are still strong with the lowest sovereign debt among G-20 countries. Furthermore, as a positive outlook, the government will spend over $615 billion during the 10th Five-Year plan by 2020.
Al-Shaikh said there could be shortcomings in the information they (S&P) relied on.
