Higher oil prices are expanding the dominant source of government revenues
Saudi Arabia’s economy will expand by 3.7 percent this year and 4 percent in 2011 as the world’s largest oil supplier benefits from high crude oil prices and government spending, National Commercial Bank said today.
In an emailed report, the Jeddah based bank, the largest Saudi lender by assets, said: “Higher oil prices are expanding the dominant source of government revenues."
It added: “Foreign capital inflows and resumption of private sector credit continue to support the non oil sector.”
Saudi Arabia has spurred economic growth with a $400 billion, five year investment package announced in late 2008.
Growth slowed to 0.6 percent in 2009 as the kingdom’s average daily oil output fell 11 percent to 8.2 million barrels a day, according to the central bank’s annual report.
Oil for November delivery climbed $1.61, or 2 percent, to settle yesterday at $81.58 a barrel on the New York Mercantile Exchange. It touched $81.64, the highest level since Aug 5. The weekly gain of 6.7 percent is the largest since Feb 19.
The Arab world’s biggest economy produced 8.25 million barrels of oil in September, according to data compiled by Bloomberg.
Based on an average Arab light crude oil price of $75 a barrel, the kingdom’s fiscal surplus will be 85 billion riyals ($22.7 billion) in 2010, according to the National Commercial Bank report. Oil revenue this year will rise 38 percent to 619 billion riyals, compared with 2009.
Inflation will average 5.2 percent this year, compared with 5.1 percent last year, the bank said. Saudi Arabian inflation accelerated for a seventh month to reach 6.1 percent in August as the costs of food and rent rose.For all the latest Saudi Arabia news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.