Saudi Arabia raised an estimated $12.2 billion from VAT in 2018, exceeding expectations by nearly one-third.
The effects of the VAT are beginning to show in inflation. According to Abu Dhabi Commercial Bank, January UAE inflation data shows a marked strengthening with the introduction of 5% VAT. Headline inflation accelerated by 2.7% m-o-m in January (December: 0.7%) with the y-o-y rate rising to 4.8% rounded (December: 2.7%). The rise in prices was broad based, particularly in categories subject to VAT, including food and clothing.
by Karen E. Young Despite slowdowns in consumer demand and general economic activity, there is evidence of alternative economic behavior and microenterprise that is thriving in the Gulf.
As a burgeoning global trend, economic nationalism is also surging in the Gulf states. What may be lost is the decade of efforts in economic integration and negotiations to make the GCC work as a common market, with complementary assets.
by Karen E. Young The Saudi budget for 2017 demonstrates that fiscal reform works; at least, it shows that with a reduction in spending will come a decline in deficit.
by Karen E. Young The GCC states have drastically reduced fuel subsidies, however have yet benefit from deficit relief.