Saudi Arabia targets surge in economic diversification: BofA

CountrySaudi Arabia

Saudi Arabia’s newly announced domestic investment programme confirms the focus on economic diversification and a shift in the growth model towards capital accumulation, said the latest BofA Global Research report.“We estimate the overall investment program announced by the authorities aims to increase domestic investments from the SR4 trillion ($1.1 trillion) level realized over 2009-2018 to SR10 trillion ($2.7 trillion) over the next decade, marking a 150% increase,“ said Jean-Michel Saliba, Mena Economist/Strategist at Bank of America Merrill Lynch (BofAML).The broader public sector (including the Public Investment Fund (PIF), Saudi Aramco and Sabic) are likely to take the lead, but the persistent funding gap suggests targets are unlikely to be met, it added.Right incentives key to boost investmentsIncentives to support domestic investments by large companies could be key to minimize costs within the Shareek SR5 trillion investment partnership program. Dividend cuts could be on the table, but likely on a case-by-case basis. The Shareek program does not mention more...