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28 March 2024

Saudi GDP to slow down in 2012

Published
By Staff

Saudi Arabia’s real GDP is projected to slow down to around 3.9 per cent in 2012 compared with 6.8 per cent in 2011 but a surge in its oil income will likely widen its fiscal surplus, according to the Gulf Kingdom’s largest bank.

The slowdown will be in both the oil and non-hydrocarbon sectors despite a modest increase in the country’s crude output, National Commercial Bank (NCB) said in its quarter review of Saudi Arabia’s economy.

It expected the Kingdom’s oil output to rise by 100,000 bpd to 9.4 million bpd this year but crude prices could slip to about $105.9 from a record high of $108.1.

A breakdown showed the oil sector is projected to grow by 1.8 per cent in 2012 compared with 4.3 per cent in 2011 while the non-oil sector could expand by nearly 4.7 per cent compared with 7.8 per cent last year.

Saudi Arabia, the largest Arab economy and world’s oil powerhouse, recorded one of its highest real GDP growth rates of 6.8 per cent in 2011 because of a sharp rise in oil prices and public spending. The country’s crude production also jumped to 9.3 million bpd from 6.2 million bpd in 2010.

As oil prices are expected to remain above $100 a barrel this year, against a breakeven price for Saudi crude of $66.4, the Kingdom’s fiscal balance is forecast to widen to nearly SR320 billion from SR306 billion in 2011 and SR87 billion in 2010. Riyadh’s suffered from a deficit of SR87 billion in 2009 because of a surge in public expenditure and a sharp drop in crude prices.

The report expected Saudi Arabia’s oil actual revenue to soar to SR1.09 billion in 2012, nearly SR300 billion above budgeted revenues. But actual expenditure is also projected to swell by nearly SR81 billion to SR771 billion, the report said.

High oil prices will also allow Saudi Arabia, which controls nearly a fifth of the world’s extractable oil wealth, to record a high current account surplus of around $151 billion in 2012. Its net foreign assets are also projected to climb to an all time high of nearly $636 billion at the end of 2012, an increase of around $101 billion over the previous year, NCB said.