Country Report Saudi Arabia September 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 recession. Municipal elections have been postponed to 2011 from 2009.
• Having increased crude production capacity to 12.5m b/d, Saudi Aramco, the state oil firm, will increasingly focus on oil and gas exploration efforts and on investment in new refineries, including two major joint ventures.
• Real GDP is projected to shrink by 1% in 2009, the first such contraction for a decade, but this is essentially a function of oil output cuts. Growth should recover to 3.3% in 2010 as oil output picks up and government spending rises.
• Based on our oil price assumptions and expectations of strong spending increases, we forecast that the central government budget will record a small deficit in 2009, its first since 2002, before returning to surplus in 2010.
• The current account is forecast to record a surplus of 1.5% of GDP in 2009, with the price of dated Brent Blend averaging US$62/barrel, rising to 5.6% of GDP in 2010, as oil prices rise to a forecast average of US$74/b that year.

Monthly review

• Official sources have reported that a Saudi suicide bomber tried to assassinate the deputy interior minister in his home in August.
• SAIC Corporation, a US-based security contractor, has been selected to develop a war college for the Saudi army.
• Saudi Arabia has risen to 13th place in the World Bank's Doing Business rankings for 2010, making progress towards its goal of entering the top ten.
• The central bank's foreign assets have fallen further as the government draws upon them to finance its spending.
• The Saudi Railway Organisation has awarded the last remaining contract for a planned new rail line connecting Riyadh with Qassim.
• UN data have indicated that foreign direct investment inflows rose in 2008 for the third consecutive year, reaching US$38.2bn.
• The central bank has published the first breakdown of GDP data for 2008, showing overall growth of 4.4%.
• The central bank has put the total number of unemployed Saudi women at 177,174 in 2008??