Saudi Arabia is having to come to terms with deflation for the first time in more than a decade. Saudi inflation has been on a downward trajectory since 2008, but the fall in January was particularly sharp — in December the inflation rate stood at 1.7%. While high inflation can cause plenty of problems for an economy, deflation is generally seen as a negative factor too. Among other things, it can act as a brake on economic activity as people postpone spending while waiting for prices to fall further. Non-oil growth is also likely to remain subdued, at around 1%, as a result of the government’s continued austerity drive.

Source: Forbes February 23, 2017 10:41 UTC