Where is Saudi’s GDP headed?
After years of exponential growth, Saudi Arabia's GDP will likely contract by 1 percent in 2009, says Jeddah-based NCB.
July 30, 2009 8:17 by Khalil Hanware
Due to the difficult borrowing environment at home and abroad, projects are facing delays in the Kingdom. With the government playing a more extensive role in investment expenditure, focus will remain on strategic or vital infrastructure projects to meet consumer and industrial demand and sustain economic growth. Inflation pressures in Saudi Arabia, which were perceived as a major concern until the first half of 2008, have eased considerably with the onset of the global economic crisis.
Recent data show that inflation in Saudi Arabia fell to 5.2 percent in June 2009, down from a peak of 11.1 percent in July last year. Despite heavy government spending, strong growth in oil revenues contributed to sizeable twin surpluses in recent years. In 2008, the fiscal and current account surpluses reached an astounding 35.2 percent and 28.6 percent of GDP, respectively.
The Saudi government remains committed to increasing spending and providing the much needed boost to domestic demand despite the projected decline in oil revenues. The government budgeted SR475 billion for total expenditure in 2009, out of which SR225 billion was allocated to capital expenditure. The budget prioritizes capital spending in key areas, such as education, healthcare and infrastructure, which is consistent with the government’s objectives to create job opportunities and support economic growth and development in the medium-term, the NCB report said.
First seen in Arab News.