No More Spending? Saudi Arabia Feels Dire Consequences of Oil Price Decline
13:35 03.04.2016(updated 16:00 03.04.2016)
Saudi Arabia is currently experiencing the consequences of falling oil prices. The foreign exchange reserves of the Central Bank have further decreased, while the Saudi population has started to spend less money, German newspaper Deutsche Wirtschafts Nachrichten (DWN) reported.
The consequences of the drop in oil prices are having an increasingly negative impact on the domestic economy of Saudi Arabia.
The amount of physical currency in circulation has thus significantly decreased for the first time since 2000, Bloomberg reported. Analysts interpret this as a sign that the pressure on the state budget and the country's economy arising from falling oil prices has gradually become noticeable among the country's residents.
Cash withdrawals fell in February by around eight percent, while money transactions also significantly slowed down in February, DWN reported.
An economic expert told Bloomberg that the data reflects weakened consumer confidence among Saudis. Despite a recovery in February and March, oil prices remain low and current incomes are under pressure this year, he argued, adding that a consumption recovery in 2016 is unlikely.
The foreign exchange reserves of the Saudi Arabian central bank also declined in February by around nine billion euros, with huge outflows bringing the state budget under pressure.
Last year, the country had achieved a budget deficit of around 15 percent of its gross domestic product
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