Saudi predicted to emerge quickest from global crisis

RIYAL RECOVERY: S&P sees the Saudi economy as being in the best position to emerge quickly from the global crisis. (Getty Images)

Saudi Arabia is tipped to recover from the global economic downturn quicker than its Gulf neighbours, a new report by Standard's and Poor says.

Analysts have lauded the efforts of Saudi banks and insurance companies in their efforts to avoid financial difficulties during the current worldwide crisis.

In its report called Insurance Markets In Saudi Arabia In The Wake of Regulatory Restructuring And The Global Economic Downturn, S&P said it "detects a widespread belief" that Saudi Arabia and its financial institutions have been less affected by the downturn than most of its neighbors.

The report adds that it believes recovery in the kingdom will likely come "more quickly than elsewhere".

S&P also say the ongoing flow of initial public offerings (IPOs) on the Tadawul Stock Exchange in 2009 is a further indication that Saudi investors still have considerable liquid assets with which to support attractive business propositions.

"In our opinion, it is testament to the underlying strength of the national economy and to the quality of both management and regulation that no Saudi-based insurers or banks have succumbed to serious financial difficulties during the current economic turmoil, though some of the nonbank investment houses have experienced some pressures," the report added.

"Meanwhile, deposit rates at local banks have remained low, indicating that liquidity has been satisfactory and confidence maintained."

This is despite a collapse in the oil price from its 2008 peak of around $147 per barrel down to current levels just below $50, and the 56.5 percent fall in the Tadawul All Share Index (TASI) during 2008.

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