Country Report Saudi Arabia April 2009

Outlook for 2009-10

• The rule of the Al Saud family is not expected to encounter any fundamental challenges in 2009-10, with the opposition fragmented and suppressed.
• Government policy will focus largely on economic development and will prioritise shoring up economic growth in the face of the global economic slowdown. Partial municipal elections scheduled for 2009 may be delayed.
• The state oil company will continue to invest in a large-scale expansion of crude oil and gas capacity, although some refinery projects will be delayed.
• GDP is projected to shrink by 1% in 2009, the first such contraction for a decade. Rising government spending and subsidies for private-sector investment should partly offset a major oil sector contraction.
• GDP growth should recover to 3.3% in 2010 as oil output expands gently.
• The fiscal account is forecast to record substantial deficits in 2009-10, for the first time since 2002.
• The current account is forecast to record deficits of 8.4% of GDP in 2009, with the price of dated Brent Blend averaging US$40/barrel, and 1.9% of GDP in 2010, with Brent at US$50/b.

Monthly review

• Prince Nayef bin Abdel-Aziz al-Saud, the conservative interior minister, has been appointed second deputy prime minister, a role that has traditionally been a stepping stone to that of crown prince.
• Another senior prince, Prince Talal bin Abdel-Aziz al-Saud, has called on the king to publicly state that a new body, the Allegiance Council, will be consulted before a final decision is taken on the political succession.
• Saudi Arabia has been ranked 161st out of 167 states in our democracy index, reflecting the lack of democratic institutions.
• The state's Human Resources Development Fund (HRDF) has said that it will cover the cost of half the first year's salary payable to a new hire as long as that person is a Saudi national.
• The government has said that it will establish two new investment companies, one of which will invest in overseas agriculture and the other in international and domestic commercial projects.
• The state oil company has said that it will spend US$60bn on energy investment projects between 2010 and 2014.
• The central bank has cut its reverse repo rate from 0.75% to 0.5%.
• Non-oil exports fell by 17.8% year on year in January.

Source: Country Report

This report covers the following industry codes:
SIC Code: 70;15;49
NAICS Code: 72;23;11;22