According to the Jadwa Investment, Saudi Arabia's economy would grow around 5.3% in 2012 its second highest growth rate in seven years.
Real GDP will expand by around 5.3% fuelled by 6.7% growth in the government sector and 5.1% increase in the hydrocarbon sector. The non oil private sector is also expected to swell by about 4.9%.
The report forecast though that the real GDP growth this will year will be lower than the 6.8% growth in 2011 when oil prices hit a record high average of around USD 106 a barrel and the Kingdom boosted its crude output by 1.1 million barrels per day to 9.3 million barrels per day.
Jadwa expected oil production to rise further to 9.6 million barrels per day in 2012 while the price of Saudi crude will remain as high as USD 100 per barrel. The price of oil fell after the government said US supplies of oil rose last week.
Benchmark oil fell 11 cents to USD 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 USD 115.20 per barrel in London.
At the pump, AAA said the national average price for gasoline rose 1.5 cents overnight to USD 3.858 per gallon. In current prices, Saudi economy, the largest in the Arab world is projected to rise by around 3.8% this year after rocketing by nearly 28% in 2011 and 19.7% in 2010. GDP plunged by about 20.9% in 2009 because of lower oil prices and a decline by around 1 million barrels per day in the country's crude supply in the wake of the 2008 global fiscal distress.
The Jadwa report showed that nominal GDP will swell to its highest level of SAR 2.25 trillion in 2012 before slipping to nearly SAR 2.21 trillion in 2013. Higher oil prices and output will also boost Saudi Arabia's revenue by nearly SAR 392 billion above its budgeted revenue for 2012. Despite an expected surge in actual spending, the Kingdom will still record a fiscal surplus of around SAR 337 billion this year, its second highest surplus since the record SAR 581 billion surplus in 2008 and against a budget deficit of SAR 87 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 adjustments reflected data revisions for 2011.
Moreover the massive surplus would allow the Kingdom to slash its public debt to SAR 115 billion at the end of 2012 and SAR 100 billion at the end of 2013 from SAR 136 billion at the end of 2011. The country's foreign assets will also climb to an all time high of USD 758 billion at the end of this year from nearly USD 645 billion at the end of 2011.
Source - The Saudi Gazette
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