Saudi oil exports soar 32% in 2010

Higher crude prices and output boosted Saudi Arabia’s oil exports by nearly 32 per cent in 2010 and the surge largely widened the Gulf Kingdom’s current account, according to official data.

From around $163.1 billion in 2009, the country’s oil export earnings climbed to nearly $214.9 billion in 2010, their second highest level in current prices since the 2008 peak income of $281 billion, the figures showed.

Non-oil exports swelled to round $36.1 billion from $29.1 billion while imports grew to nearly $96.7 billion from $86.4 billion in the same period, showed a government report, cited by the Riyadh-based Jadwa Investments.

Despite higher imports, the country’s current account surplus more than tripled to nearly $66.8 billion in 2010 from $21 billion in 2009. The 2010 surplus was the second largest after the 2008 record balance of $132.3 billion.

A current account breakdown showed the trade balance surplus soared t0 $154.3 billion last year from $105.2 billion in 2009, still way below the $212 billion peak surplus recorded in 2008, when oil prices hit an all time high average of around $95 a barrel, according to Jadwa.

Growth in foreign workers’ remittances dropped dramatically last year, to just 1.9 percent from an average of 17 percent over the previous four years.

“The reason for the lower growth is not clear, though growth has been volatile in the past. There is no indication that the increase in foreign workers eased last year, or that pay for expatriates was cut,” Jadwa said.

Despite the slowdown, expatriate remittances amounted to $26.2 billion, an average of $72 million every day of 2010.

The capital and financial account, which measures flows in investments and reserves, swung into a large deficit in 2010, owing to movements in the Kingdom’s reserves, the report showed.

Net incomes fell by 18 percent in 2010 to $6.8 billion while returns on the government’s holdings of foreign debt and equities totaled $14 billion in 2010, little changed on the 2009 figure.

Although the total stock of foreign assets was up slightly, this was likely offset by the marginal decline in US government bond yields. “We think that most of the government’s foreign assets are invested in US government bonds.”

In contrast, direct investment income payments hit a record of $9.9 billion, an indication of the growing foreign participation in the Kingdom’s economy.

The report showed that the decline in net income was because of a sharp fall in revenues from other investments, such as interest payments on loans.

“In 2010, as with most recent years, the use of revenues that are not spent domestically to purchase foreign assets results in a net outflow on the capital and financial account,” Jadwa said.

“In 2009, when reserves were drawn down to finance domestic spending, there was a net inflow through the capital and financial account.”

The report showed inflows of foreign direct investment fell sharply in 2010 and at $21.6 billion were down by 40 percent from the 2009 level.

It attributed the decline to inflows of just $4.7 billion in the first half of the year, by far the lowest over any six month period for which the data is available since 2006. Inflows picked up in second half and totaled $8.3 billion in final quarter.

“In general, foreign direct investment flows are lumpy, as they are related to specific projects. Given the time lag between making an investment decision and the necessary payments, the dip in the first half of last year could have been a hangover from the global financial crisis……. inflows peaked in the final quarter of 2008 when the crisis was at its worst.”

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