Saudi Arabia: Assessing the impact of the Khashoggi affair
Florence Eid-Oakden, Ph.D, Chief Economist
Charlene Rahall, Analyst
- Saudi Arabia’s yet-to-be-clarified role in the death of journalist Jamal Khashoggi at its consulate in Istanbul has upset Western allies, rattled the Saudi stock and FX markets and undermined the “Davos in the Desert” Future Investment Initiative. There has been a short-term impact, but we believe the longer-term effect on the economy, foreign direct investment and the kingdom’s Vision 2030 programme -- will be minimal.
- How long and how deep will the impact of the Khashoggi crisis be? We think Saudi Arabia will take a short-term confidence hit but weather the storm over time.
- Saudi Arabia’s economic diversification efforts are unlikely to be derailed, partly because they have been under way for decades, and are now being massively accelerated. This, in itself, will bring back foreign investors who could take a pause on the back of recent headline risk.
- Though wary of each other, Saudi Arabia and Turkey have traditionally tried to avoid public spats. The countries have significant trade and investment ties and vie for influence across the region.
- Once the mid-terms elections are behind him, and particularly if they go in his favour, President Trump could well choose to reduce the frequency of his public statements on the Khashoggi matter. Managing Congress will challenge Saudi savvy to rise to new levels.
The Country Views series shines the spotlight on specific developments in MENA countries, analysing them from a local perspective to deliver forward looking views for businesses and investors.
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