CAIRO: A new report published this week has revealed that Saudi Arabia's economic growth is expected to fall to 3.1 percent this year after 6.8 percent growth last year. According to the new study published by Jadwa Investment, the resulting drop in growth is due to expected reductions in the ultra-conservative Gulf kingdom's drop in oil production forecast. But, growth in the non-oil economy, however, could see a near five percent increase and government spending is to be supported by a rise in bank lending and consumer spending, the report said. Jadwa argued that Saudi would see “another year of reasonable economic performance. “Non-oil growth will be strong and inflation should ease. Lower oil production will cause total real economic growth to slow, and combined with lower oil prices, will reduce the budget and current account surpluses,” it said. Government spending, it said would remain the key indicator of the economy and the non-oil sector, while construction and infrastructure development would be the fastest growing sector. Budgeted government spending for 2012 is well below the actual level for 2011, but this latter figure was distorted by one-time payments, said the report. “We expect another budget surplus in 2012. The government will draw down its foreign assets, which stood at around $520 billion at the end of October, to finance its expenditure plans in the event of any shortfall in revenues,” said the report. Inflation is forecast to moderate to an annual average of 4.4 percent in 2012. Negligible external price pressures, due to lower commodity prices, a strong dollar and subdued inflation in trading partners, will underpin the decline. “This will be supported by lower rental inflation, as more properties enter the market, though the amount of new supply, and therefore its impact on inflation, is not clear,” the report added. BM ShortURL: http://goo.gl/RTxMI Tags: Economy, Growth, Oil, Spending Section: Business, Latest News, Saudi Arabia
