14/06/2010
Total increase in Saudi local production up to 3.9% in 2010
According to financial report issued by the Banque Saudi Fransi which has recently expected that the total rate of local productions growth in the Kingdom will reach 3.9 percent this year, increasing up to 4.2 percent in 2011, due to the factors of local conditions, and also as a result of the high economic growth rates for both the non-oil and public.
Meanwhile, the bank has lower his expectations for the growth rate of oil sector to 3.6 percent, raising its forecast for average GDP growth of the public sector up to 4.6 percent, the highest level in 13 years, based on the determined efforts by the Saudi government to achieve all the objectives of the overall budget.
According to the report, prepared by Dr. John Sfakianakis, General Manager and Chief Economist at ''Banque Saudi Fransi'', and a Turk Al-Hugail, Senior Director of Economic Dept of the bank: the current economic status of of Saudi Arabia's has changed slightly compared to his condition six months ago, despite the global economy has became more fragile as a result of European debt crisis.
While some felt that the threats of infection of the European debt crisis is now looming, nevertheless; we see that the Kingdom had largely immune to such threats, especially that Saudi banks exposure of European banks is very limited.
Risk classification has been changed in Bahrain, UAE, and Yemen to the top. As for Bahrain, the UAE has been changed from 2 to 3 while Yemen from 6 to 7. For Kingdom, Qatar, Oman and Kuwait are the less risk.
Nonetheless; Gulf investors in general including the Gulf wealth funds are more exposed than Gulf banks to debt and equity markets of Europe and European stocks, which mean that any downturn in the performance of European equity markets would reduce the value of the assets of Gulf investors. The European sovereign debt crisis has already strengthened the tendency of avoiding risks.
Caution of the largest company in the Arab world may result in avoiding a new wave of risk between companies and private Saudi banks, which could delay the recovery of bank credit activity in the Kingdom.
