Country Report Saudi Arabia March 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 government will continue to invest in a large-scale expansion of crude oil and gas capacity, although refinery projects may be delayed.
• Saudi Arabia will continue to seek foreign investment into six new "economic cities", but may need to scale back some of its plans.
• Economic growth is projected to be virtually flat in 2009, with risks weighted to the downside. It should pick up to 3.3% in 2010 as oil output begins to rise.
• Based on the Economist Intelligence Unit's assumptions about oil production and prices, and given extensive spending commitments, the budget 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% of GDP in 2009, with the price of dated Brent Blend averaging US$40/barrel, and 1.6% of GDP in 2010, with Brent at US$50/b.

Monthly review

• The king has replaced virtually all the top judicial officials, signalling a desire to press ahead with judicial reforms that were announced in October 2007.
• The king has also appointed new ministers for education, culture and information, and health, as well as the country's first female deputy minister.
• Shia Saudis held a number of protests in February, triggered by clashes between religious police and Shia pilgrims in Medina.
• One of the Yemen-based Saudi militants featured in a video issued by a new branch of al-Qaida has given himself up to police, according to Saudi and Yemeni security officials.
• OPEC has opted to leave its production targets unchanged in April and to focus instead on compliance with the output cuts announced in December.
• Saudi Arabia has more than complied with its OPEC-mandated production cuts, having reduced output to 7.8m b/d in February.
• Saudi Aramco, the state-owned oil company, has awarded a series of contracts for its Karan gasfield, which it aims to bring on stream in 2011.
• The broad money supply has stopped expanding, according to January data, and bank credit to the private sector has fallen compared with December.

Source: Country Report

This report covers the following industry codes:
SIC Code: 47
NAICS Code: 48