Despite an unfavorable climate in the regional and world economic situation, all indicators showed that the Saudi economy has been in excellent shape, according to a report of the Council of Saudi Chambers (CSC).
The report noted that the Saudi economy gave an excellent performance last year. This was all the more evident as the Kingdom's inflation dropped to 3.4 percent in November, the report said yesterday.
Commenting on the inflation data, John Sfakianakis, chief investment strategist at Masic in Saudi Arabia, said:
"Inflation over the first three months of the year have been at 3.9 percent year-on-year and it’s expected that during the second half of the year we could see a pick up of prices due to the Ramadan effect, other seasonal factors and base effects. "
He said: "Inflationary pressures are the direct result of food and rental prices. Average annual inflation should be a tat higher than 4 percent for 2013."
Basil Al-Ghalayini, CEO of BMG Financial Group, told Arab News: "It is still difficult to measure the trend of inflation during Q1, 2013. We see no change in consumer goods prices while building materials prices have shown noticeable increase."
The CSC report commended the government for taking steps to stimulate economic growth, including spending more than SR 100 billion to modernize infrastructure schemes and other projects of roads and bridges. The report put the country's gross domestic product (GDP) growth rate at 6 percent in 2012.
"The oil sector's contribution to the GDP accounted for about 50.4 percent, while the nonoil sector contributed 49.6 percent," it said.
“Nonoil private sector growth over the last two years has been extremely solid at above 7.5 percent and its share of output is half of the economy's total which is telling of the country's efforts to diversify. If compared over the last two decades, the growth of the nonoil sector have been noteworthy and essential," Sfakianakis said.
The report attributed the low inflation rate to a fall in prices in the food and rental sectors.
A surplus budget with SR 829 billion revenues and SR 820 billion expenditure not only showed the strength and vigor of the Saudi economy but the promise of economic robustness of performance expected in the current year against the bleak projections in the worldwide economy.
The 2013 budget registered a revenue increase of SR 127 billion compared to the previous year.
The report attributed the low inflation of 3.4 percent to the fall in food prices and rentals, which reached the lowest levels in that year paying off the efforts taken by concerned departments to protect local markets from the upheavals in international markets.
The report noted that the nonoil exports reached SR 176 billion while imports were at SR 540 billion. Meanwhile, the oil export is expected to cross SR 1 trillion in 2012, indicating an anticipated SR178.5 billion surplus in Saudi current account.
The Kingdom's balance of foreign currencies and deposits abroad rose by 10.05 percent to reach SR 648.6 billion. The reserve asset at the Saudi Arabian Monetary Agency (SAMA) rose by 13.5 percent compared to the end of 2011 while the Saudi reserve in the International Monetary Fund (IMF) rose by 11 percent to reach $ 5.4 billion in August 2012.
The report noted the private sector's economic activities growing at the rate of 7.5 percent at fixed prices while the sector contributed 58 percent of the GDP. It has indicated the active role played by the private sector in the downstream industries and services.
Another commendable achievement of the Kingdom in 2012 was that it notched up to the 50th place among 146 countries in the field of knowledge investment while it was 76th in 2000.
The report noted the country's lead position among the Arab countries with an export of $ 7.9 billion, accounting for 37.2 percent of their total exports.
The Kingdom is at the top of the countries using mobile phones in the world. It is also at the eighth position internationally in the IMF list of countries that achieved the highest economic growth rates in 2012.
The Kingdom also occupied 18th position among 20 countries in terms of the revenues in the telecommunication and information technology services, even ahead of Switzerland and Turkey while it is in 24th position among 177 countries in the use of mobile Internet services, the report said.
