Mood sours among Saudi businessmen as oil slides
Saudi Arabian entrepreneur Essam alZamel has overcome many obstacles to found a string of technology companies in the past decade, but he thinks sliding oil prices will be hard to handle.
"A black economic cloud is covering the skies of Saudi Arabia," Zamel tweeted last week, warning that prices might not recover for five or 10 years. Oil's drop to sixyear lows, less than half mid-2014 levels, is beginning to sour the business mood in the world's top oil exporting nation. After a decade of sky-high oil revenues and rapid growth, Saudis are grappling with the idea they may be entering a long period of more modest economic circumstances. That realization is reflected in a tumbling stock market and a public debate about the kingdom's economic future - some of it coming close to criticizing government policy, which is unusual in a country where dissent is tightly controlled. "Over the past 10 years, expert advice has been ignored. The economic system did not heed it and preferred to sleep on the cushion of the oil boom," tweeted prominent economist Abdulhamid al-Amri.
Saudi Arabia must wean the private sector off an addiction to oil-fueled government spending and curb speculation in the stock and real estate markets, which is widening social inequality, he wrote. Other economists and businessmen are urging officials to do more to diversify the economy, reduce the kingdom's dependence on millions of foreign workers, and restructure state spending. Consultant Fawaz al-Alami wrote in the Al Watan newspaper that instead of issuing bonds to finance itself in an era of cheap oil, the government should save money by cutting subsidies that keep electricity prices low - a politically sensitive reform from which authorities have so far shied away.
Financial reserves mean Saudi Arabia is far from crisis. With Brent crude at $45 a barrel, the government is running an annual budget deficit near $150 billion - but it has over $600 billion of foreign assets at the central bank and little debt.