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Saudi Arabia to see high spending growth in 2019

Saudi Arabia will see one of the highest rates of recurrent growth in spending this year due to cost-of-living allowances and annual bonuses for state employees, according to a report by Fitch Solutions on Wednesday.

Some major economies are likely to see a deficit increase, and fiscal consolidation will slow in 2019 Across the GCC, the report said

“Despite decelerating oil price and revenue growth, we believe most GCC governments will prioritize the stimulation of economic activity over strict fiscal prudence in the near term,” Fitch Solutions said.

“Many governments will continue to ramp up investment, partly to prepare for particular events (Expo 2020 in Dubai and the 2022 FIFA World Cup in Qatar) but more broadly to support long-term economic diversification agendas and stimulate job growth. This comes against a backdrop of still-weak nonhydrocarbon private investment,” Fitch Solutions added.

Recurrent spending will in most cases remain the key driver of fiscal expansion as governments look to ease pressures on households’ purchasing power brought about by measures such as VAT implementation and subsidy cuts.