Tuesday, May 15, 2012
1214 GMT [Zawya Dow Jones]--A huge fiscal stimulus by the Saudi government has driven non-oil growth rates to record highs, but a build up in domestically driven inflationary pressures suggests overheating in the kingdom's economy is a growing risk going forward, says London-based Capital Economics. Notes while the scale of the rise in core inflation has been modest, it does indicate that the government's fiscal stimulus package is feeding into stronger domestic demand--further signs of which come from the sustained acceleration in credit growth. Reckons sustained high growth rates in the private sector could cause demand to quickly bump up against supply constraints, leading to more marked rises in core inflation. "Unfortunately, there is little available data on output or the labour market to properly gauge this. However, the strength of import growth does suggest that domestic demand is already leaking overseas," it adds.
(leila.hatoum@dowjones.com)
Copyright (c) 2012 Dow Jones & Co.
(END) Dow Jones Newswires
15-05-12 1217GMT
