Friday, March 23, 2018

"ANALYSIS: Money flees Saudi Arabia at rapid pace"

Ya think?
From Middle East Eye:

Cash is leaving Saudi Arabia at an exponential rate because of the country's struggling economy, report shows
A torrent of money has fled Saudi Arabia as a result of its struggling economy.
It’s bad news for a country that is desperately trying to shed its dependence on the energy business and refashion its economy for a post-oil world.

New research shows the kingdom saw tens of billions of dollars of capital leave the kingdom each year from 2012 up to and including last year. Next year there will be more of the same, states the March-dated report from the DC-based think tank, the Institute of International Finance (IIF).
As much as $64bn in core capital left Saudi Arabia in 2017 based on data through the third quarter
“Core capital flows ran at a substantially negative pace last year... with little sign of improvement in the data through Q3 2017,” the report stated.

Capital refers to cash and other economic assets. In the case of the study, IIF analysts removed overseas borrowing made by the kingdom. The result is the so-called “core capital flow”.
“Prior to recent years, Saudi didn’t borrow externally, so we wanted to strip that out to see whether there are outflows or inflows,” says Greg Basile, senior research analyst at IIF.
What they found was a substantial and consistent outflow of capital.

As much as $64bn in core capital left Saudi Arabia in 2017 based on data through the third quarter, the report estimates. That’s up from $55bn the year before. This year the outflow is set to continue with a projected $26bn to leave the country. 

Why the exodus?
Did the financial seizures of princes and other royals get taken into account in the IIF report? Probably not.

“Chances are we won’t see the effect of the capital outflow from that until this year,” says Marcus Chenevix, a Middle East-North Africa analyst at the financial firm TS Lombard in London.
The reason is simple. The princes were detained and therefore were not free to arrange to move assets out of the Kingdom, says Chenevix.

“Did capital immediately leave the country? Probably not,” he said....