OREANDA-NEWS. BMI View: With little prospect of a significant upturn in oil prices, Saudi Arabia is entering a protracted period of subdued growth. As a result, business confidence remains depressed and this will impact on both sales and employment. This has prompted a further downward revision to our 2016 household expenditure growth in the retail sector from 7.8% to 6.7%.

Key Views & Developments

- Saudi Arabia is entering a protracted period of subdued growth, with low oil prices negatively impacting business confidence, banking liquidity and government spending. In addition, real growth in the oil sector will decelerate, further compounding the country's economic slowdown. We are therefore forecasting rea economic growth of 1.0% in 2016 and 1.5% in 2017, down from 3.4% in 2015. This year will mark the slowest growth rate for the Saudi economy since 2002.

- The continued economic headwinds facing Saudi Arabia have prompted us to revise downwards our 2016 household expenditure growth forecast from 7.8% to 6.7%. This still represents a healthy level of growth, however, with the pace likely to pick up again next year.