Commodities, Currencies, Emerging Markets, Energy, Frontier Markets, Stocks

Saudi Arabia To Increase Military Budget By 27 Percent By 2020

Saudi Arabia is on track to become the world’s fifth-largest military spender by 2020 as it boosts its defence budget by 27 percent over the next five years despite lower oil prices,” Simeon Kerr, Financial Times correspondent reports from Dubai.

Saudi Arabia Fighter Jets

Saudi Arabia aggressively continues to increase its military spending and despite the recent heavy oil price crunch it could have the world’s 5th largest military budget within the next five years.

According to consultancy IHS Jane’s Aerospace, Defence & Security, Saudi Arabia defence spending are projected as follows:

  • $48.7bn in 2015
  • $49.5bn in 2016
  • $52.0bn in 2017
  • $62.0bn in 2020

We certainly expect a significant slowdown in the short term but longer term prospects remain strong,” said Craig Caffrey, IHS principal defence budget analyst.

Saudi Arabia has been increasing its military spending very aggressively in order to protect its interests in the oil rich GULF region and is becoming one of the top military equipment importers on the global geopolitical scene.

Saudi Arabia’s economy is likely to slow next year as low oil prices force the country to cut spending, the International Monetary Fund said.

Oil prices have fallen by more than 40% in the past 11 months to about $65 a barrel from a high of $115 last July, a collapse driven by a flood of American shale oil. The IMF said declining oil prices have already hurt the kingdom’s export and fiscal revenues, but the impact on the economy has been limited thus far, with growth forecast to remain at 3.5% this year,” Market Watch reports.

The IMF estimates that Saudi Arabia will run a fiscal deficit of around 20% of its gross domestic product in 2015.

Middle East funds were increasingly positive toward Saudi Arabia’s stock market as oil prices appeared to be stabilising and the kingdom was preparing to open its bourse to direct foreign investment, Arab News reported at the end of February this year.

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Chief ETF Strategist & Co-Founder at EMerging Equity


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