World Economy

Saudi Problems Mounting

Saudi Problems Mounting Saudi Problems Mounting

If Saudi Arabia is acting a bit unhinged of late, it’s easy to see why: the kingdom is facing a host of troubles.

Its economy is in recession due to a 50% drop in oil prices. It’s on bad terms with nearly all its neighbors after bombing Yemen, sending troops into Bahrain to crush democratic protests, financing Sunni terrorism in Syria and Iraq, blockading Qatar, and arresting the prime minister of Lebanon, the American Conservative reported.

While seeking to lure foreign investors, Crown Prince Muhammad bin Salman has rounded up hundreds of princes and local businessmen in a reported attempt to shake them down for $100 billion or more, hardly a confidence-boosting measure.

“Half my Rolodex is in the Ritz right now,” one western investor said of the Riyadh luxury hotel that in November was converted into a makeshift prison. “And they want me to invest there now? No way.”

Added Richard Parsons, former Time Warner CEO and ex-Citigroup chairman: “It is unclear why or what the rationale is. If you’re an investor or a businessperson, you’re going to take a step back from the starting line and say, ‘I’m just going to keep my money in my pocket’.” Instead of attracting capital, Prince Muhammad is encouraging it to flee.

With 60% of Saudis under the age of 20, and 60% unemployed between the ages of 20 and 24, government has little choice but to provide public-sector jobs for a population that is increasingly threadbare yet doesn’t want to work.

Meanwhile, Saudi Arabia’s telecom sector profitability will be hurt this year by reforms being undertaken in the kingdom and changes in policies of the telecom regulatory authority, according to a new report from NCB Capital, the investment arm of Saudi lender NCB.

NCB Capital is forecasting a 1.4% drop to 9.3 billion Saudi riyals ($2.48 billion) in the net income of the sector this year compared with 2017.


Add new comment

Read our comment policy before posting your viewpoints