Country Report Saudi Arabia October 2009

Outlook for 2010-11

• The rule of the Al Saud family is expected to remain secure in 2010-11, with opposition movements fragmented and suppressed.
• The government's political effectiveness will be constrained by the need to build consensus among senior princes and, to a lesser extent, influential clerics, as well as by the vast and inefficient bureaucracy.
• Some resentment of Al Saud rule will continue but is unlikely to translate into organised opposition movements, although there is a particular risk of unrest in Eastern Province given the marginalisation of the Shia majority there.
• Saudi Arabia will seek to contain the regional influence of Iran, and the two will remain at odds over Iraq, Lebanon, Yemen and the Palestinian territories.
• Real growth is forecast to average 3.4% per year in 2010-11. The government plans US$400bn of public investment between 2009 and 2013.
• The central government budget is forecast to record a surplus of 4.4% in 2010 but a small deficit of less than 1% of GDP in 2011 as oil prices dip.
• The Saudi riyal is forecast to remain pegged to the US dollar in 2010-11, although the level at which the peg is set could be altered in preparation for a Gulf monetary union (with a single currency not expected before 2013).
• The current account should remain firmly in surplus, although oil price trends should cause this to narrow to from 10% of GDP in 2010 to 6.5% in 2011.

Monthly review

• King Abdullah has visited Syria for the first time since 2005, as part of a renewed push for reconciliation between the two countries.
• The Saudi Press Agency has said that Saudi Arabia and Syria agreed on the need to expedite the formation of a national unity government in Lebanon.
• There have been reports of rioting in the eastern city of Khobar in September.
• A crackdown on Shia religious practices in Khobar has also been reported by human rights organisations, although it is unclear if this is linked to the unrest.
• A flagship graduate research university, the King Abdullah University of Science and Technology, has been opened close to Jeddah.
• The chief executive of Saudi Aramco, Khalid al-Falih, has expressed caution about the timeline for increasing oil production.
• The Saudi-based Saad Group, which defaulted on its debt this year, has reached repayment agreements with Saudi (but not international) banks.
• A new airline, Alwafeer, has been licensed, focusing on the pilgrim market.

Source: Country Report

This report covers the following industry codes:
SIC Code: 60;49;37;70
NAICS Code: 52;22;336;72