Global economic shock spillovers to the Saudi economy : an assessment framework

Abstract EN

This paper introduces a framework for assessing global shock spillover specifically address the global financial spillovers to the Saudi economy by exploring the main fundamental determinants of creditworthiness including key global factors, Macroeconomic and Financial Sector vulnerability.

Finally highlights the extent to which the Saudi financial system have been able to regain a sound standing in the aftermath of the recent financial crises to which they have been subjected.

The main conclusion is that global financial crisis has had limited direct impact so far on domestic financial markets but, the country was and still effected through trade, reflected in high inflation rate, tighter liquidity and weak investor confidence.

Government generous spending has been successful in reducing the impact of the global crisis, but Saudi Arabia should adopt alternative venue to the current high spending levels.

In light of anticipated fall in oil prices, the current strategy is not sustainable.