Saudi Arabia can withstand turmoil faced by other emerging markets: MUFG

With oil prices hovering at near four year highs, Saudi Arabia has the capacity to withstand the turmoil that has impacted other more vulnerable emerging markets in recent months, MUFG Bank said in a recent report.

“Whilst the biggest challenge will be implementation of the reform program in line with Vision 2030, it is clear that unlike previous cycles during bouts of low oil prices, this time appears, at face value, genuinely different,” the report added.

It also added that the country ‘may be’ moving towards a period of meaningful structural change away from the reliance of hydrocarbons.

“Economic challenges facing the Kingdom are structural and not cyclical in nature with policy reform acting as the common denominator,” it noted.

However, it said the cyclical upswing stemming from oil prices hovering at four year highs will serve as a testament for the Kingdom’s commitment to meaningfully change the structure of its economy.

The pressure to return to oil driven consumption is likely to be difficult to resist in the face of the challenging near term growth environment, it said.