EFG, which named Saudi Arabia as one of its top macroeconomic picks in the Middle East and North Africa region, said it expects the world’s top oil exporter to continue to provide a strong fiscal stimulus in 2010, as government spending accelerates.
"The latest data points to a notable strengthening in domestic activity compared to 2009 levels, especially investment-related activities," EFG said.
It forecast a nonoil GDP rate of 4.6 percent in 2010, up from 3.7 percent in 2009.
The investment bank forecast a rise in Saudi Arabia’s real gross domestic product growth to 3.3 percent in 2010 from 0.6 percent in 2009. It expects Saudi Arabia to see a small fiscal surplus equivalent to 1.3 percent of GDP in 2010, after realizing a deficit of 3.2 percent in 2009.
"With oil about $ 60 per barrel, Saudi Arabia’s strong reserve and low debt positions allow the government to continue with its spending plans," EFG said.
The Kingdom ramped up spending to help its crude-reliant economy sail through the global crisis, launching a $ 400 billion five-year plan in 2008, the largest stimulus relative to gross domestic product among 20 leading nations.
Saudi Arabia’s Finance Minister Ibrahim Al-Assaf told Reuters last month that the Kingdom had no plans to raise government spending beyond its 2010 plan to keep inflation under control
