S&P cuts outlook on Saudi Arabia as oil prices weaken

Standard & Poor— which previously warned of slower growth across the GCC— downgraded its outlook for Saudi Arabia to AA-, from ‘positive’ to ‘stable’ as oil prices continue to weaken, the agency said on Friday.

“In our view, Saudi Arabia's per capita GDP will not increase enough for us to improve our assessment of its economic structure and growth prospects, as defined in our criteria, and given our downward adjustments to our medium-term oil price projections,” S&P said in a statement.

The agency said the kingdom’s economy is “undiversified and vulnerable” due to the sharp and continuous decline in oil prices.

“The ratings are supported by the very strong external and fiscal positions Saudi Arabia has built up over many years,” the agency said on Friday.

“By managing high oil revenues prudently, the general government has retired virtually all of its debt, generating additional fiscal space for countercyclical policies. We estimate the general government's net asset position at 118 percent of GDP on average during 2014-2017.”