Saudi economy in excellent shape

The Saudi Arabian economy is in excellent shape and heading for another huge budget surplus and current account surplus this year, according to Dr Said Al Sheikh, chief economist at the National Commercial Bank.

Dr Sheikh told Gulf News this week that the Saudi Government is set to post a surplus of around $4.2billion this year, following on from last year's 17-year record surplus of $12.8 billion. He forecasts a fall in total government revenues from $66 billion to $62 billion this year, and is projecting revenue of $56 billion for 2002.

These figures show just how strong the Saudi economy has become thanks to the greatly improved oil prices of the past two years, and point to a sustained expansion of the local economy in real terms. Growth of 4.8% will be achieved in 2001 on the NCB's projections.

Indeed, the current account will also post a $5 billion surplus this year, down on $16 billion last year, but still a very positive performance. According to Dr Sheikh the Kingdom's cash reserves at the end of August stood at $16 billion, and have doubled in the past two years.

His forecast for real Saudi GDP for 2001 is $173 billion, up from $165 billion in last year, or growth in real terms of 4.8%. Dr Sheikh says that this is the result of the growth in the private sector and high public spending.

The Saudi Arabian economy accounts for around a quarter of the Arab world's GDP, and remains the bellweather economy of the region. For if Saudi Arabia is having a good time so will everyone else.

These figures tend to support the views of those who believe business fundamentals have not changed in the Middle East since the present international emergency began on September 11. And provided the strikes on Afghanistan do not widen into a regional conflict, the Middle East will continue to grow strongly against a backdrop of recession elsewhere in the world.