Low oil prices and the COVID-19 pandemic are taking a toll on Saudi Arabia's economy and budget; GDP is forecast to contract by 4.5% in 2020, and the general government fiscal deficit to rise to at 11% of GDP. However, from 2021 onward, GDP growth, oil prices, and oil volume exports are expected to rebound as global conditions improve.
S&P Global Ratings’ estimate of Saudi Arabia's relatively strong net asset position on both its fiscal and external balances is still a key support to the rating. Nevertheless, prolonged low oil prices and demand will likely erode its net asset position over the ratings horizon.
In S&P’s view, the balance of risks is appropriate at the current rating. Therefore, they affirm their 'A-/A-2' long- and short-term sovereign credit ratings on Saudi Arabia. The outlook is stable.