Saudi economy sees no adverse impact from turmoil

Saudi Arabia's economy has not seen any adverse impact from turmoil that is currently rocking the Arab world, as the OPEC crude producer started implementing new social measures as of yesterday, its finance minister said.

2 March 2011, 12:00am

2 min read

The world's top oil exporter has so far escaped popular revolts that toppled entrenched leaders in Egypt and Tunisia, and now challenge autocratic regimes in Libya, Bahrain and Oman.

"We have not seen any adverse impact on the Saudi economy," Ibrahim Alassaf told reporters.

He earlier told a financial conference that the economic and financial situation in the desert kingdom was stable after the regional unrest cast a shadow over investors outlook on markets across the Gulf.

Saudi stocks have suffered from the jitters, slipping to nine-month lows this week, while Saudi currency forwards are near their weakest levels in two years. Debt insurance costs have also risen across the Gulf, the world's top oil exporting area.

King Abdullah unveiled benefits for Saudis worth around 22 billion pounds after returning home last week after three months of medical treatment abroad.

"There will be immediate execution (of the king's measures)," Alassaf said.

Part of the king's handouts will go to new funds to help Saudis to get housing loans, a pressing issue for the Gulf Arab state's rising native population of 18 million and where over 10 percent of locals are unemployed.

Alassaf also said spending would rise this year following the king's measures but that it was too early to say by how much, adding budget revenue would increase.

Saudi Arabia plans to draw on its reserves to help fund the new social benefits, he said on Sunday.

Net foreign assets in the largest Arab economy reached a record high of 1.67 trillion riyals in January, nearly 9 percent up from the previous year on robust oil prices.

G20 member Saudi Arabia has outlined spending of 580 billion riyals for 2011 in its third consecutive record budget, with a conservative revenue estimate of 540 billion.

The wave of Arab anti-government protests have driven oil prices higher, with Brent crude trading around US$112 a barrel and U.S. crude US$97 a barrel yesterday.

Saudi analysts said the King might also soon reshuffle his cabinet to inject fresh blood and revive stalled reforms. Saudi stability is of global concern as the key U.S. ally holds more than a fifth of world oil reserves.