Saudi economic growth to slow by 1% in 2009 - report

Saudi Arabia’s economic growth is predicted to slow in 2009 due to a contraction in the oil sector, according to a new report by National Commercial Bank.

Although the analysis of the kingdom's economic performance was described as "exceptional in recent years", it added that real GDP (gross domestic product) growth was expected to fall by around 1 percent this year as a contraction in the oil sector is projected to offset moderating growth in the non-oil sector.

It added that real GDP growth is forecast to increase by 3 percent in 2010 based on a recovery in global demand conditions and a higher oil production level, Saudi Gazette reported on Sunday.

According to the report, between 2003 and 2007 real GDP growth averaged around 5 percent a year, the strongest growth in a decade, and up strongly from the 2.5 percent annual average growth during the 1990s.

Last year, real GDP growth was estimated to have reached 4.5 percent, largely driven by strong private and public investment expenditure on the back of record oil prices and abundant liquidity, the newspaper added.

However, the NCB report said the economic growth outlook for 2009 had deteriorated sharply because of the global financial crisis and economic recession.

Although Saudi Arabia has been less affected by the financial crisis, the indirect impact on the real economy will be significant.

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