- When currency values and exchange rates change due to variations in supply and demand, it affects a country's imports and exports. A stronger domestic currency makes imports cheaper and exports more expensive, hurting the trade balance. - Oil-producing Gulf countries like Saudi Arabia face budget deficits as lower oil prices reduce revenues and economic growth. Saudi Arabia has enough reserves to maintain spending for 5 years but is trying to cut costs. Other GCC nations like UAE and Qatar are in better financial conditions. - Saudi Arabia may devalue its currency to boost exports, reduce the trade deficit, and repay sovereign debt more quickly. However, lower oil prices and reliance on oil exports pose sustainability challenges that require diversifying economic sources.

1. Saudi Arabia & GCC Case
Presented By:
Eng. Meshary Al Ali

2. Introduction
- Currency Circle
- Currency ≈ Demand & Supply
- The Global Effect
- The Currency Changed Effecting on SAR

3. The differences in the value of currency affect
-The ability to buy the imports
-The ability to sell the exports.

5. (Varvares, 2015)
`

6. -When supply and demand for any currency changes it
also changes the values of those currencies, imports of
USA is less expensive
- When interest rates of any currency are higher than
other the demand of the foreign currency increased.
Trade deficit
importers prefer stronger currency and exporters
prefer weaker currency.

7. An increase in real GDP will lead to the appreciation of local
currency. An increase in real GDP signifies an increase in productivity
which will drive the general price level in the economy down. Price
level will reduce as per the quantitative theory of money which
states that,
MV = PY
If we keep M and V constant; an increase in Y will lead to a decrease
in P.
From the definition of relative PPP (Purchasing Power Parity),
%change in exchange rate = Inflation in local economy - Inflation in
foreign economy
Therefore, a decrease in price level will drive down the inflation and
also the exchange rates

9. Devalues its currency due to these reasons:
• To Raise their Exports – When the Riyal devalued its value then
the local products are cheaper and in this case exports level is
increased.
• Decrease the Trade Deficit – When the Riyal lose its value then
exports are increased and imports decreased and its result can
be seen in the form of a favorable balance of payments.
• Payoff of the Sovereign Debt – If Saudi Arabia issues massive
amount of debt and its currency is also devalued then it pays
off its debt early over the period of time.

10. - Oil prices
- Sustainability
- sharp cuts
- With depending in different sources
other than oil such as Mining, Tourism,
and sustainable products

11. GCC countries depends upon oil and as the prices of oil are low so their huge
budget surpluses transform in massive deficits.
Saudi Arabia largest oil producer of the world, enough fiscal amount to
survive next five years and now they are trying to preserve cash.
UAE, Kuwait and Qatar good conditions - balance their budgets.
Gross domestic product (GDP) Statistics
is the monetary value of all the finished goods and services produced within a country's borders in a specific time period

12. 8.50%
5.40%
3.60% 2.70%
1.60%
7.80%
14.50%
20.20%
25.10%
29.50%
33.40%
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
35.00%
40.00%
2010
2011
2012
2013
2014
2015E
2016E
2017E
2018E
2019E
2020E
Saudi Arabia Public Debt level (% of GDP)

13. 11.30%
30%
-5.40%
4.40%
11.60%
13.60%
6.50%
-2.00%
-19.70%
-13.20%
-30.00%
-20.00%
-10.00%
0.00%
10.00%
20.00%
30.00%
40.00%
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
Saudi Arabia Fiscal Deficit (%of GDP)

14. Middle East GDP Growth Outlook (2011-2020)
0
200
400
600
800
1000
1200
KSA UAE IRAN IRAQ QATAR KUWAIT OTHERS
2011
2020
All values in US $ Billion – Others include Oman- Yemen- Lebanon – Jorden – and Bahrain
Oil Revenue,% Share

15. Gross International Reserves in GCC –
US $ Billion
0
5
10
15
20
25
30
35
40
45
50
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
BAHRAIN
OMAN
KUWAIT
QATAR
UAE
Saudi Arabia

16. Real GDP Growth, 2014 and 2015
World U.S. Euro Area Emerging
Markets China Russia
2014 3.3 2.4 0.9 4.4 7.4 0.6
2015 3.5 3.6 1.2 4.3 6.8 -3.0
2015
Revision from
Oct. 2014 WEO
-0.3 0.5 -0.2 -0.6 -0.3 -3.5
MENAP Oil
Exporters GCC
Non-GCC
Oil
Exporters
MENAP Oil
Importers
CCA Oil
Exporters
CCA Oil
Importers
2014 2.7 3.7 1.5 3.0 5.2 4.7
2015 3.0 3.4 2.4 3.9 4.9 4.4
2015
Revision from
Oct. 2014 WEO
-0.9 -1.0 -0.7 0.0 -0.8 -0.4

17. Thank you & Any
Question
@MesharyNAlAli