Saudi Arabia projects wider budget deficit as defense spending climbs amid regional tensions
Saudi Arabia now expects its budget deficit to reach 4.9% of GDP this year, up from a 3.3% forecast, as it ramps up spending to bolster defenses and alternative trade routes.
Saudi Arabia’s Finance Ministry has revised its 2024 fiscal outlook, forecasting a deficit of 4.9% of GDP, up from the 3.3% estimate made late last year. The widening gap stems from heightened government spending aimed at strengthening defenses and building trade routes that avoid the Strait of Hormuz amid regional conflict. Although higher oil prices have compensated for reduced export volumes, keeping revenue above pre-war figures, the pace of expenditure growth exceeds these gains.
The kingdom anticipates a 3.6% contraction in the economy this year as oil output falls sharply, but projects a near-13% rebound by 2027 if oil flows recover. Riyadh has kept oil shipments close to pre-war levels by diverting crude to the Red Sea and navigating tankers through Hormuz despite Iranian warnings, while also curbing non-essential spending.
Why it matters
The widening deficit signals rising fiscal pressure on Saudi Arabia as it funds defense and infrastructure amid regional instability.
How this story developed
- Sep 2 Diesel hits $5.68 per gallon, highest since 2022, as Trump urges price cuts
- Sep 20 Oil benchmarks rose on Monday following a missile and drone attack by Yemen’s Iran-backed Houthis on Saudi Arabia’s capital Riyadh.
- Sep 21 Fire on the tanker was extinguished after the projectile strike.
- Sep 22 Indian airlines have increased seat capacity in Delhi and Maharashtra.
- Sep 22 In August, fuel and lubricant prices rose in 26 of the 27 EU members, with Poland experiencing a rise of about 24%.
- Sep 23 A cargo ship was struck by an unknown projectile, igniting a fire and forcing crew evacuation.
- Sep 24 Gas storage levels are now reported at about 69% of capacity, below the usual seasonal target.
- Sep 24 Iran’s president publicly rejected any surrender to the United States at the UN.
- Sep 25 Refinery output shifts and refinery strikes have created a measurable shortfall in bunker‑fuel supply for the third quarter.
- Sep 26 Eurostat now reports that some EU states experienced the lowest fuel price increases, with Hungary, Sweden and Ireland at the bottom of the growth scale.
- Sep 27 The yen rose about 0.8% to 157.65 per dollar after Finance Minister Satsuki Katayama highlighted possible coordinated intervention.
- Sep 27 The Saudi pipeline across the Arabian Peninsula was closed after an attack in Iraq, adding to the blockage of the Strait of Hormuz.
- Sep 29 Trump turned down Iran’s peace proposal at the United Nations.
- Sep 30 Diesel prices have risen to a record level, with a full tank now costing about £110.
In this story
Related stories
35 in this thread