RIYADH – Saudi Arabia’s economy would grow around 5.3 percent in 2012, its second highest growth rate in seven years, Jadwa Investment said Wednesday.
“Real GDP will expand by around 5.3 percent, fuelled by a 6.7 percent growth in the government sector and 5.1 percent increase in the hydrocarbon sector. The non-oil private sector is also expected to swell by about 4.9 percent.”
The report forecast though that the real GDP growth this will year will be lower than the 6.8 percent growth in 2011, when oil prices hit a record high average of around $106 a barrel and the Kingdom boosted its crude output by 1.1 million barrels per day to 9.3 million bpd.
Jadwa expected oil production to rise further to 9.6 million bpd in 2012 while the price of Saudi crude will remain as high as $100 a barrel.
The price of oil fell Wednesday after the government said US supplies of oil rose last week.
Benchmark oil fell 11 cents Wednesday to $97.06 per barrel in New York.
The supply report erased gains seen after a German court cleared a path for Europe to create a fund to bail out financially troubled countries. That’s one of several strategies Europe is pursuing to resolve its debt crisis.
Traders also are waiting to see if the Federal Reserve will offer more help for the US economy. Previous Fed stimulus efforts have encouraged investors to buy riskier assets such as oil.
Brent crude increased 43 cents to $115.20 per barrel in London.
At the pump, AAA says the national average price for gasoline rose 1.5 cents overnight to $3.858 per gallon.
In current prices, Saudi economy, the largest in the Arab world, is projected to rise by around 3.8 percent this year after rocketing by nearly 28 percent in 2011 and 19.7 percent in 2010. GDP plunged by about 20.9 percent in 2009 because of lower oil prices and a decline by around one million bpd in the country’s crude supply in the wake of the 2008 global fiscal distress.
The Jadwa report showed nominal GDP will swell to its highest level of SR2.25 trillion in 2012 before slipping to nearly SR2.21 trillion in 2013.
Higher oil prices and output will also boost Saudi Arabia’s revenue by nearly SR392 billion above its budgeted revenue for 2012. Despite an expected surge in actual spending, the Kingdom will still record a fiscal surplus of around SR337 billion this year, its second highest surplus since the record SR581 billion surplus in 2008 and against a budget deficit of SR87 billion in 2009.
IEA forecast global oil demand of 89.8 million barrels a day in 2012 and of 90.6 million barrels in 2013, both up just marginally from its previous report released in August. The IEA said the adjustments reflected data revisions for 2011.
Moreover, Jadwa said the massive surplus would allow the Kingdom to slash its public debt to SR115 billion at the end of 2012 and SR100 billion at the end of 2013 from SR136 billion at the end of 2011.
The country’s foreign assets will also climb to an all time high of $758 billion at the end of this year from nearly $645 billion at the end of 2011. – SG/Agencies