Our GDP Tracker suggests that Saudi Arabia’s economy slowed sharply at the start of this year as the impact of fiscal austerity weighed heavily on the non-oil sector. Meanwhile, today’s decision by Fitch to downgrade the Kingdom’s sovereign credit rating from AA to AA- does not materially affect the outlook for the economy. But it reinforces the point that the budget deficit is large and a substantial fiscal tightening will be required over the coming years, keeping growth subdued.
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