Saudi economy may grow by 6 pct in 2011 – c.banker
Growth may be higher following spending package; Saudi growth forecasts fairly conservative, says economist
June 9, 2011 8:59 by p.deleon
Saudi Arabia’s economy could grow around 6 percent this year rather than the 4.3 percent currently estimated thanks to a recently unveiled social spending package, its central bank governor was quoted as saying on Wednesday.
Worried by unrest sweeping the Arab world, the world’s top oil exporter has pledged to spend an estimated $130 billion, or around 30 percent of its annual economic output, on new houses, creating jobs, unemployment benefit and other measures.
“The economic outlook …is encouraging and very positive,” Central Bank Governor Muhammad al-Jasser said in a speech posted on the central bank’s website www.sama.gov.sa.
“The kingdom … expects an average (growth) rate of 4.3 percent in 2011.”
“But the package of decisions … to enhance the purchasing power of citizens and increase investment in housing and health may lead to higher growth estimates of around 6 percent,” he said.
The International Monetary Fund (IMF) forecast the biggest Arab economy will expand by 7.5 percent in 2011, while analysts polled by Reuters in March expect it to grow 4.5 percent.
“The Saudi forecasts are fairly conservative, bearing in mind that they are thinking of increasing oil output as part of their OPEC agreement,” said Gabriel Sterne, senior economist at Exotix in London .
Saudi energy minister Ali Al-Naimi said last week the country would lift production if there was demand for more crude.
But the kingdom failed to convince fellow members of OPEC at talks in Vienna on Wednesday to lift production to help consumer nations struggling with high fuel costs.
Saudi Arabia relies on hydrocarbons for over 80 percent of budget revenue, and robust oil prices this year — near $100 per barrel for U.S. light crude on Wednesday — have been another spur to growth.
“From the point of view of nominal GDP, including the effects of oil prices, things could even look better,” Sterne said.
Saudi inflation reached 4.8 percent year-on-year in April, and analysts say demand will be boosted by the package of government handouts.
By Martina Fuchs
(Reporting by Martina Fuchs; Editing by John Stonestreet)