Bad investment

The Saudi Arabia's economy is not in a recession, according to its economic data; however, non-oil industry contracted 0.7 per cent year on year in the first three months in 2016, which we can say the Saudi Arabia's non-oil economy is in a recession. Declines in certain industries are not frightening, the real problem that Saudi Arabia has got is that the oil industry is not a sustainable industry that it could have the same fortune as the coal industry had in the future and the government knows about it, so the government puts a lot of effort into its non-oil industries, such as tourism. The recession in the non-oil economy lowers the market expectation about the Saudi Arabia's future economic performance, which then can affect the credit rating of its government bonds. The cause of such decline in the non-oil industry I believe is due to the lower government spending caused by the low international oil price. Moreover, from the official data, the decline in the non-oil industry is steeper than the decrease in its oil economy. This could show some of the Saudia Arabia's non-oil industry problems that it has been too dependent on the government spending, which comes from the oil incomes. Such phenomenon happens to other oil-dependent economies, that have non-oil sectors that depend on the investment from the oil industry and are not sufficient. Therefore, I think that investment should be made in order to make projects self sufficient in the future and this is the same with investing in other sectors.