Strong crude prices will ally with higher oil production to lift Saudi Arabia’s economy by nearly 5.3 per cent 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 per cent, fuelled by a 6.7 per cent growth in the government sector and 5.1 per cent increase in the hydrocarbon sector. The non-oil private sector is also expected to swell by about 4.9 per cent.
The report by the Riyadh-based Jadwa Investment showed real GDP growth this will year will be lower than the 6.8 per cent 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 million barrels per day to 9.3 million bpd.
Jadwa expected oil production to rise further to 9.6 million 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 per cent this year after rocketing by nearly 28 per cent in 2011 and 19.7 per cent in 2010. GDP plunged by about 20.9 per cent in 2009 because of lower oil prices and a decline by around one million 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 SR2,245 billion in 2012 before slipping to nearly SR2,213 billion in 2013.
Higher oil prices and output will also boost Saudi Arabia’s revenue by nearly SR392 billion above its budgeted revenue for 2012. Despite an expected surge in actual spending, the Kingdom will still record a fiscal surplus of around SR337 billion this year, its second highest surplus since the record SR581 billion surplus in 2008 and against a budget deficit of SR87 billion in 2009.
Jadwa said the massive surplus would allow Saudi Arabia, the world’s top oil exporter, to slash its public debt to SR115 billion at the end of 2012 and SR100 billion at the end of 2013 from SR136 billion at the end of 2011. Riyadh’s foreign assets will also climb to an all time high of $758 billion at the end of this year from nearly $645 billion at the end of 2011.