Saudi Arabia’s economy, the largest in the Middle East, is expected to expand again this year as the Gulf Kingdom remains shielded from external shocks given its massive foreign assets, its largest bank said on Tuesday.
Although the International Monetary Fund has recently cut its global outlook to 3.3 per cent from previous estimate of four per cent for 2012, Saudi Arabia will likely see high growth this year as the government is pushing ahead with a massive spending drive to stimulate the economy, National Commercial Bank (NCB) said in its weekly market bulletin.
“As Europe remains the focus of the global turmoil and emerging economies face difficulties to maintain growth levels, the Saudi economy remains resilient and on the path for further expansion this year,” it said.
“The Saudi economy is well positioned to expand this year and is firmly shielded from external shocks as its net foreign assets approached nearly $600 by the end of the first quarter.”
NCB cited its recent survey showing the Kingdom’s hydrocarbon composite index has increased by three points to 43 for 2Q2012 on the back of higher oil revenues which have been the outcome of higher Saudi oil production and elevated prices due to the Iranian dispute.
Meanwhile, the non-hydrocarbon composite index edged lower to 52 from 54 for the second quarter of 2012.
The construction composite index slipped by two points to 57 as government plans to aid Saudi housing needs are still in the pipeline.
“The construction sector is expected to rebound and record the highest growth this year as we near the execution phases of various mega-projects.”