JEDDAH: Saudi Arabia's economy may grow by around 6 percent this year following a recently unveiled social spending package, up from an estimated 4.3 percent, its central bank governor was quoted as saying Wednesday. The Kingdom has pledged recently to spend an estimated $130 billion, or around 30 percent of its annual economic output, on new houses, creating jobs, unemployment benefit and other measures. "The economic outlook for the Kingdom of Saudi Arabia in 2011 is encouraging and very positive," Central Bank Governor Muhammad Al-Jasser said in a speech posted on the central bank's website www.sama.gov.sa. "The Kingdom posted a real gross domestic product growth of 4.1 percent in 2010 and expects an average rate of 4.3 percent in 2011. But the package of decisions taken by the King recently to enhance the purchasing power of citizens and increase investment in housing and health may lead to higher growth estimates of around 6 percent for the current year," he said. Previous central bank estimates showed the Saudi economy had grown by 3.8 percent in 2010 constant 1999 prices. The OPEC member relies on hydrocarbons for over 80 percent of budget revenue, and robust oil prices this year - near $98 per barrel Wednesday - are also seen to spur economic growth. Analysts polled by Reuters in March expect the biggest Arab economy to grow by 4.5 percent in 2011. Saudi inflation reached 4.8 percent year-on-year in April, and analysts say demand will be boosted by the package of government measures. The International Monetary Fund said Tuesday the economic growth in Saudi Arabia is set to increase to 6.5 percent this year, up from 4.1 percent in 2010, Leading indicators for the first quarter of 2011 show a strengthening in economic activity due to an increase in oil output and more government spending, the IMF said in a statement at the end of annual consultations with authorities in the Kingdom. Inflation would likely rise to about 6 percent, the IMF said without elaborating. Government data May 14 showed annual inflation rose to 4.8 percent in April due to higher food and transport costs. "The economy is poised for continued robust growth," the IMF said. "Oil production is increasing further to compensate for lower output elsewhere in the region," the IMF said, adding that both fiscal and external balances in Saudi Arabia are likely to register strong surpluses amid an increase in oil production.
