Strong oil price fuels solid economic performance
The continued strength of the oil price means that Saudi Arabia is set for another successful economic performance this year and unless there is a change in this market, should deliver a second successive year with a budget surplus.
Economic analysts have been revising their projections for this year upwards as during the first quarter of the year both prices and production exceeded expectations.
Based on an estimated $28.50 a barrel average price for the year and 8.3 million barrels a day production (compared with 8.7 million b/d in 2003) Brad Bourland, chief economist at the Riyadh-based Samba Financial Group, says there should be ?surpluses in both the government budget (SR20 billion) and the current account ($15.5 billion)?.
Bourland also forecasts that private-sector growth, which is vital if Saudi Arabia is to generate jobs for its young population, will reach 4.5% as consumer demand and business investment both grow faster than expected. This would mark a considerable improvement on the disappointing 3.4% growth in 2003.
?We detect a higher level of business and consumer confidence in the first quarter than seen during 2003, which enables us to raise our projection of private-sector growth to 4.5%