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Wed 1 Jun 2011 09:59 AM

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Saudi economic growth to hit 6.5% in 2011

IMF sees kingdom’s economy strengthening on oil output, state spending

Saudi economic growth to hit 6.5% in 2011
SAUDI INFLATION: Government data on May 14 showed annual inflation rose to 4.8 percent in April due to higher food and transport costs (Getty Images)

Economic growth in Saudi Arabia is set to increase to 6.5 percent this year, up from 4.1 percent in 2010, the International Monetary Fund said on Tuesday.

Leading indicators for the first quarter of 2011 show a strengthening in economic activity due to an increase in oil output and more government spending, the IMF said in a statement at the end of annual consultations with authorities in the world's biggest oil exporter.

Inflation would likely rise to about 6 percent, the IMF said without elaborating. Government data on May 14 showed annual inflation rose to 4.8 percent in April due to higher food and transport costs.

"The economy is poised for continued robust growth," the IMF said. Its statement did not mention the effects, if any, on the Saudi economy from mass protests throughout the Middle East and North Africa this year.

The region has been hit by protests from Tunisia and Egypt, where rulers were toppled, to Morocco, Jordan, Yemen, Bahrain, Syria, Iran and Libya where governments are fighting to stay in power.

Saudi Arabia, which does not tolerate any form of dissent, has managed to stave off the unrest that has hit other countries in the region.

"Oil production is increasing further to compensate for lower output elsewhere in the region," the IMF said, adding that both fiscal and external balances in Saudi Arabia are likely to register strong surpluses amid an increase in oil production.