Saudi Arabia's economy is booming thanks to oil revenues
Saudi Arabia booming in increasing oil prices
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Saudi Arabia's economy is forecast to surge by around 3.8 percent on current prices, to hit an all time high in 2012 amid swelling oil prices underpinned by robust public and private sectors, Jadwa Investments said
It also projected that the Kingdom's real GDP would grow by nearly 5.3 percent in 2012, one of its highest rates in years, with the government sector leading the growth. From around AED2.01 billion ($569 million)in 2011, nominal GDP is projected to swell to an all time high of AED2.2 billion ($560 million) in 2012, Jadwa said. Nominal growth in 2012 will be far below the 28 percent rate achieved in 2011, one of its largest increases in Saudi history.
It is also below the 19.7 percent growth in 2010, but in contrast with a 20.9 percent contraction in 2009, when oil prices slumped by nearly 50 percent to $60 a barrel and Saudi Arabia slashed crude output by about one million barrels per day to 8.2 million bpd. Jadwa expected nominal GDP to edge down by 1.4 percent to AED2.16 billion ($590 million) in 2013, but it will remain the largest in the Arab world. Real GDP is projected to grow by 5.3 percent in 2012, but growth will slow down to 3.5 percent in 2013 mainly because of lower oil production.
The report projected the government sector to grow by around 6.7 percent in 2012, while the private sector would grow by around 4.9 percent. The oil sector is forecast to swell by 5.1 percent before shrinking by 3.4 percent in 2013 due to an expected fall in oil output from 9.6 million bpd to 9.2 million bpd.Jadwa's forecasts showed the price of Saudi Arabia's crude hit a record high average of $106.5 in 2011 and expected it to slip to $100.3 this year and continue its decline to reach $91.4 in 2013.
It said high oil prices and production this year would allow Saudi Arabia to record its second highest fiscal surplus of AED330 billion ($90 billion) after the record balance of AED569 billion ($155 billion) in 2008. The budget recorded a surplus of AED300 billion ($81.5 billion) in 2011 and AED95 billion ($26 billion)in 2010, while it incurred a deficit of AED85 billion ($23.2 billion) in 2009.
The price of oil fell 2.2 percent Friday after disappointing US corporate earnings and a drop in existing home sales sparked worries again about the global economy. Benchmark oil fell $2.05 to finish at $90.05 per barrel in New York. Brent crude, which is used to price international varieties of oil, dropped $2.28, or 2 percent, to end at $110.14 per barrel in London.
The Organization of Petroleum Exporting Countries said in a monthly report that its 12 members will need to provide an average of 29.8 million barrels a day in 2013, about 200,000 more than estimated last month. The group reduced its forecast for output from outside the group for next year by the same amount, to 53.89 million barrels because of lower-than-expected growth in emerging nations.
Still, world markets will remain "characterized by high volumes of crude supply and increasing production capacity," the organization said."The outlook for production from India and other Africa in 2013 were revised down on the back of updated data in 2012, which provided an insight into the expectations for 2013," OPEC's Vienna-based secretariat said in its Monthly Oil Market Report.
Brent crude futures have advanced 6 percent this year, as concern that tensions with Iran and violence in Syria may lead to wider supply losses counter signs that the economic recovery is faltering. Saudi Arabian Oil Minister Ali Al-Naimi said earlier that prices for Brent, trading near $114 a barrel recently, are "still high" and that the Kingdom would prefer a level of $100. OPEC kept its forecast for global oil demand in 2013 unchanged, predicting that consumption will increase by 780,000 barrels a day, or 0.9 percent, to 89.6 million a day.
Growth in non-OPEC supply coupled with natural gas liquids has outpaced demand this year, a trend that will probably to continue into next year, the group said.Non-OPEC producers will increase output by 890,000 barrels a day next year, driven by growth in the US and Canada, according to OPEC. OPEC production fell by 265,000 barrels a day last month to 31.08 million a day.