Real GDP growth put at 5.6% and fiscal surplus to widen
Higher oil prices will expand Saudi Arabia's economy by more than $95 billion in 2011 while real GDP will pick up by nearly 5.6 per cent, its highest growth in six years, according to an investment firm in the Gulf kingdom.
The increase in crude prices will also ally with higher oil output to turn a budgeted fiscal deficit into a surplus despite a sharp rise in actual public expenditure, the Riyadh-based Jadwa Investments said in a study.
From around SR1,630 billion ($435 billion) in 2010, the country's nominal gross domestic product will soar to nearly SR1,988.4 billion ($530.3bn) in 2011, an increase of about $95.2bn or nearly 21.9 per cent.It will be one of the highest nominal GDP growth rates in Saudi Arabia's history as a result of a sharp rise in crude prices, which Jadwa projected at an average $99.3 for Saudi crude against $77.7 a barrel in 2010.
Real GDP is forecast to rebound by around 5.6 per cent this year compared with 3.8 per cent in 2010 and as low as 0.2 per cent in 2009.Growth will be driver by both the oil and non-oil sectors. Jadwa expected the hydrocarbon sector to jump by 8.9 per cent while the non-oil sector will likely expand by 4.2 per cent and the government sector by five per cent.Besides higher crude prices, Jadwa expected Saudi Arabia's oil production to increase to an average 8.8 million barrels per day in 2011 compared with 8.2 million bpd in 2010 as a result of Riyadh's decision to boost crude supply to offset the disruption of Libya's oil exports because of the war.
The study expected higher output and prices to boost Saudi Arabia's crude export earnings to one of their highest levels of nearly $278.4bn in 2011, sharply higher than the income of $214.9bn in 2010.It said the increase would allow Saudi Arabia to turn an assumed budget deficit of SR40bn into a surplus of nearly SR127bn compared with SR109bn in 2010 and an actual deficit of SR87bn in 2009, when Saudi crude prices averaged about $60.
Jadwa said the surplus would be achieved although actual spending could rise by a whopping 42.5 per cent to SR821bn. But it noted that higher crude prices and output would push up the country's actual revenue by nearly 75 per cent to SR948bn.The study expected the public debt, which had soared above the Kingdom's GDP in late 1990s, to dip to its lowest level of SR160bn in 15 years, accounting for nearly eight per cent of GDP.
The current account balance is also expected to record a much wider surplus of nearly SR130bn in 2011, almost double the 2010 surplus.Jadwa also projected Saudi Arabia's foreign assets to gain nearly $94bn to reach around $614bn at the end of 2011, their highest ever level.
© Emirates 24|7 2011
