Saudi economy expected to grow by 5.3 % in 2012

Sep 12, 2012 12:00 AM

Strong crude prices will ally with higher oil production to lift Saudi Arabia’s economy by nearly 5.3 % in 2012, its second highest growth rate in seven years, according to a key Saudi investment firm.
Real GDP will expand by around 5.3 %, fuelled by a 6.7 % growth in the government sector and 5.1 % increase in the hydrocarbon sector. The non-oil private sector is also expected to swell by about 4.9 %.

The report by the Riyadh-based Jadwa Investment showed real GDP growth this will year will be lower than the 6.8 % growth in 2011, when oil prices hit a record high average of around $ 106 a barrel and the Gulf Kingdom boosted its crude output by 1.1 mm bpd to 9.3 mm bpd.
Jadwa expected oil production to rise further to 9.6 mm bpd in 2012 while the price of Saudi crude will remain as high as $ 100 a barrel.

In current prices, Saudi Arabia’s economy, the largest in the Arab world, is projected to rise by around 3.8 % this year after rocketing by nearly 28 % in 2011 and 19.7 % in 2010. GDP plunged by about 20.9 % in 2009 because of lower oil prices and a decline by around 1 mm bpd in the country’s crude supply in the wake of the 2008 global fiscal distress.
The report showed nominal GDP will swell to its highest level of SR 2,245 bn in 2012 before slipping to nearly SR 2,213 bn in 2013.

Higher oil prices and output will also boost Saudi Arabia’s revenue by nearly SR 392 bn above its budgeted revenue for 2012.
Despite an expected surge in actual spending, the Kingdom will still record a fiscal surplus of around SR 337 bn this year, its second highest surplus since the record SR 581 bn surplus in 2008 and against a budget deficit of SR 87 bn in 2009.

Jadwa said the massive surplus would allow Saudi Arabia, the world’s top oil exporter, to slash its public debt to SR 115 bn at the end of 2012 and SR 100 bn at the end of 2013 from SR 136 bn at the end of 2011.
Riyadh’s foreign assets will also climb to an all time high of $ 758 bn at the end of this year from nearly $ 645 bn at the end of 2011.

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