Saudi economy to expand at 3.9% this year – report

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Saudi riyal. Photo - Filipinodoctorsinksa.com

National Commercial Bank said Saudi economy will expand 3.9% this year and will hit 4.4% during next year.

The Jeddah-based bank said in a report that the government will have a fiscal surplus of 317.4 billion riyals ($84.63bn), or 14% of gross domestic product, with an average crude oil price of $105 a barrel for Arab Light this year. It added that the kingdom will produce an average of 9.4 million barrels a day of oil in 2012.

“Growth in non-oil sectors, particularly construction, manufacturing and wholesale and retail trade, will also remain robust this year, mainly due to strong private and public investment and consumption spending,” the bank said. “Strengthening of domestic demand is reflected in a rise in private-sector credit and the double-digit growth in merchandise imports.”

King Abdullah Bin Abdul Aziz approved a $130 billion spending plan which was unveiled during the first quarter of 2011. The package included allowances for government workers and salary increases for military personnel.

Latest data released by the Saudi central bank suggested mortgage lending surged 27% to an all-time high of 29.3 billion riyals last year, while credit for cars and equipment also advanced 17%.

National Commercial Bank also disclosed that the government may register a revenue of 1.09 trillion riyals ($290bn) of which oil sales contributed to 1.01 trillion riyals ($270bn). The Finance Ministry projected in December last year that revenue for 2012 will stand at 702 billion riyals ($187.18bn), less than actual revenue of 1.11 trillion riyals ($300bn) in 2011.

The bank maintained that inflation in Saudi Arabia this year will average 4.8%.

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