Saudi Arabia - Economic breathing space during political uncertainty

Lack of ability to implement economic and political reforms combined with the presence of American troops leads to a loss of legitimacy for the Saudi regime. Violence and terror inside Saudi-Arabia raised further doubt as to the stability of the country. Saudi crude oil production is vital to the world oil market, and the stability of the regime is therefore an issue for the oil price and consequently for the Norwegian economy too. We show that the economic outlook for Saudi-Arabia is more positive than most previous analyses have shown. As long as the crude oil price is above 30 USD per barrel Saudi-Arabia will probably enjoy a reasonably high economic growth rate and earlier financial imbalances will decrease. This might reduce political opposition and provide the authorities with room for manoeuvre so that planned reforms in the economy as well as democratization can take place.