\n\tRIYADH: Fitch Ratings affirmed Saudi Arabia\u2019s \u2018A+\u2019 sovereign credit rating with a stable outlook, citing strong fiscal buffers and external finances despite regional conflict and temporary trade disruptions.<\/p>\n
\n\tThe ratings agency said the Kingdom\u2019s government debt and sovereign net foreign assets remain considerably stronger than those of similarly rated peers, supported by substantial fiscal buffers in the form of deposits and other public sector assets. Oil dependence and governance indicators, however, continue to constrain the rating.<\/p>\n
\n\tThe affirmation follows a period of heightened regional tensions that disrupted shipping through the Strait of Hormuz, with Fitch concluding that Saudi Arabia\u2019s economy and public finances remained resilient despite the conflict.<\/p>\n
\n\t\u201cThe rating reflects strong fiscal and external balance sheets, with government debt\/GDP (gross domestic product) and sovereign net foreign assets considerably stronger than the \u2018A\u2019 and \u2018AA\u2019 medians, and significant fiscal buffers in the form of deposits and other public sector assets,\u201d Fitch said in its report.<\/p>\n
\n\tThe agency added that \u201cthe economy and public finances have been resilient to the US-Iran war,\u201d despite elevated geopolitical risks across the region.\u00a0<\/p>\n
\n\tAngus Blair, CEO of Signet, told Arab News the affirmation reflects Saudi Arabia\u2019s swift response to the regional conflict earlier this year, as well as its ability to recalibrate government spending while maintaining the momentum of Vision 2030.<\/p>\n
\n\t\u201cThe affirmation by Fitch of the Saudi Arabian ratings is a reflection of the fast Saudi reaction to the USA\/Iran\/Israel kinetic action earlier this year and the recalibration of government spending through its ministries and other arms,\u201d he said.<\/p>\n
\n\tFitch expects Saudi Arabia\u2019s real GDP growth to slow to 0.6 percent in 2026 due to trade disruptions caused by the temporary closure of the Strait of Hormuz.<\/p>\n
\n\tThe agency said oil exports continued via the Kingdom\u2019s East-West pipeline during the conflict, while non-oil growth was affected by disruptions to petrochemical exports. Consumer spending, however, remained resilient, while business confidence is recovering.<\/p>\n
\n\tThe ratings agency expects growth to rebound in 2027 as shipping flows normalize, allowing higher oil and petrochemical production.<\/p>\n
\n\tFitch said the phased delivery of giga-projects, continued Public Investment Fund spending under its new five-year plan, and major upcoming events will underpin economic activity, although lower government capital expenditure, project recalibration, and slower credit growth are expected to moderate the pace of expansion.<\/p>\n
\n\tAbdullah Almeer, assistant professor of economics at KFUPM Business School, told Arab News the affirmation reflects the Kingdom\u2019s ability to balance near-term geopolitical challenges with longer-term structural reforms.<\/p>\n
\n\t\u201cThe Saudi economy exhibits a complex structure of resilience and strategic strength, balancing the ongoing non-oil diversification agenda under Vision 2030 with efforts led by the Public Investment Fund and the government to reduce the hydrocarbon-dependent fiscal framework,\u201d he said.<\/p>\n
\n\tFitch projects the fiscal deficit to narrow this year as higher oil prices offset lower production volumes before widening to 4.7 percent of GDP in 2027 as oil prices ease.<\/p>\n
\n\tGovernment debt is forecast to rise to 41.3 percent of GDP by the end of 2028 from 31.8 percent at the end of 2025. Even so, the agency said the ratio would remain well below the projected median for similarly rated sovereigns.<\/p>\n
\n\tBlair said the government’s focus has increasingly shifted toward encouraging domestic investment to support near-term economic growth while keeping the Kingdom’s long-term economic transformation on track.<\/p>\n
\n\tSaudi Arabia\u2019s external position also remains a key credit strength, according to Fitch.<\/p>\n
\n\tThe agency projects foreign exchange reserves to remain broadly stable at the equivalent of 11.6 months of current external payments this year, while sovereign net foreign assets are expected to stay significantly above peer levels despite increased borrowing.<\/p>\n
\n\tFitch also said the Kingdom\u2019s banking sector remained resilient throughout the regional conflict without requiring central bank support.<\/p>\n
\n\tAt the end of the first quarter, non-performing loans stood at 1.1 percent while the Tier 1 capital ratio reached 19.2 percent, both improving from their levels at the end of 2024.<\/p>\n
\n\tAlmeer said Saudi Arabia\u2019s banking sector remains a key pillar of that resilience, with total banking assets reaching approximately SR4.9 trillion ($1.30 trillion), supported by strong capitalization and a positive outlook.<\/p>\n
\n\tHe said the temporary slowdown in growth projected by Fitch should be viewed in the context of the disruptions caused by regional tensions rather than as a sign of weakening economic fundamentals.<\/p>\n
\n\tHe noted that while the closure of the Strait of Hormuz weighed on non-oil activity by disrupting petrochemical exports, domestic demand remained resilient, helping sustain business confidence.<\/p>\n
\n\t\u201cDespite the near slowdown, the medium run remains positive after normalizing maritime traffic, which will support oil and petrochemical exports,\u201d he said.<\/p>\n
\n\tBlair said Saudi Arabia\u2019s ability to redirect more oil exports through the Red Sea helped underpin government revenues and enabled the Kingdom to weather the regional political situation better than many of its neighboring states.<\/p>\n
\n\tAlmeer added that recent economic indicators point to continued momentum in the non-oil economy, highlighting that the Industrial Production Index rose 3.2 percent month on month in May, while the Purchasing Managers\u2019 Index reached 53.3 in June, signaling continued expansion in the non-oil private sector.<\/p>\n
\n\tHe said growth over 2027 and 2028 is also expected to be supported by projects led by the Public Investment Fund.<\/p>\n
\n\tThe latest assessment follows other positive actions by major credit rating agencies this year.<\/p>\n
\n\tIn May, Moody\u2019s affirmed the Kingdom\u2019s sovereign credit rating at \u201cAa3\u201d with a stable outlook, citing the country\u2019s economic resilience, an expanding non-oil economy, and its resilience to regional geopolitical risks and trade disruptions.<\/p>\n
\n\tThe latest decision also comes shortly after the International Monetary Fund upgraded its 2027 growth forecast for Saudi Arabia to 5.5 percent from 4.5 percent in April, saying the Kingdom is expected to be less affected by regional disruptions due to its diversified export infrastructure.<\/p>\n
\n\tLooking ahead, Fitch said future upgrades could be supported by reforms that further reduce the budget\u2019s dependence on oil price volatility, stronger non-oil revenue generation, sustained oil prices above its current forecasts, or continued economic reforms that deepen non-oil growth and reduce reliance on public spending.<\/p>\n
\n\tConversely, the agency said a prolonged deterioration in the security environment, significant disruption to oil exports, a sustained weakening in public finances, or a sharp increase in government-related contingent liabilities could put downward pressure on Saudi Arabia\u2019s sovereign rating.<\/p>\n","protected":false},"excerpt":{"rendered":"RIYADH: Fitch Ratings affirmed Saudi Arabia\u2019s \u2018A+\u2019 sovereign credit rating with a stable outlook, citing strong fiscal buffers…\n","protected":false},"author":2,"featured_media":537673,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[114,184,85,46],"class_list":["post-537672","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-business","tag-economy","tag-il","tag-israel"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts\/537672","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/comments?post=537672"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts\/537672\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/media\/537673"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/media?parent=537672"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/categories?post=537672"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/tags?post=537672"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}