Country Report Saudi Arabia November 2008

Summary

The rule of the king, Abdullah bin Abdel-Aziz al-Saud, is not expected to encounter any fundamental challenges in 2009-10, with his popularity bolstered by rising public spending, and the opposition fragmented.
Under King Abdullah, government policy will focus largely on economic development, and there will be some further easing of social restrictions. However, the partial municipal elections scheduled for 2009 may be delayed.
The government will invest in a large-scale expansion of crude oil, refining and gas capacity, while also developing the non-oil economy, in order to reduce the country's dependence on crude oil and to foster job creation.
Saudi Arabia will continue to seek foreign investment into six new "economic cities", but may need to provide new public financing or scale back some of its plans, given the severe seizure in global financial markets.
Based on our assumptions about oil production and prices, the Saudi budget is forecast to record small deficits in 2009-10, for the first time since 2002.
The current account is forecast to remain in surplus in 2009-10. However, the surplus is likely to narrow sharply to an average of 4.7% of GDP.

The election of Barack Obama as the next US president has met cautious optimism in Saudi media and the king has twice spoken to him by telephone.
The governor of Najran, Prince Mishaal bin Saud bin Abdel-Aziz al-Saud, has departed from his post following a series of complaints by the local Ismaili community about discrimination and repression.
The US and Saudi Arabia have reached agreement on a plan to recruit and train a new 30,000-man security force to protect Saudi oil facilities.
The price of Saudi Arab Light crude plummeted from US$136/barrel in early July to US$58.26/b at end-October. OPEC has agreed to cut total production by 1.5m barrels/day (b/d), but there is little sign of substantial Saudi cuts so far.
Saudi Aramco officials have confirmed that they will press ahead with projects aiming to expand crude capacity to 12.5m b/d, but have said that they are reviewing some of their planned downstream projects.
The central bank has injected US$3bn worth of US dollar deposits into local banks and has cut its repo rate by a further 50 basis points.
Maaden, the state-controlled mining company, and Rio Tinto Alcan have said they will review plans to build a 740,000-tonnes/year joint-venture aluminium smelter in the light of the poor global financing climate.

Source: Country Report

This report covers the following industry codes:
SIC Code: 60;82;47;49;1;10;70;15;39
NAICS Code: 52;61;48;22;11;212;72;23;31