Forecast Sep 18th 2007
From the Economist Intelligence Unit
Source: Country Forecast
Country Forecast Saudi Arabia
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Five-year political, policy and economic forecast for each country plus a new long-term outlook section, including projections of key macroeconomic and market size variables up to 2031.
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No fundamental threat to the rule of the Al Saud family is expected over the outlook period. Although the king, Abdullah bin
Abdel-Aziz al-Saud, is relatively reform-minded, his primary concern will remain maintaining the rule and unity of the royal
family, which requires him to accommodate both the political aspirations of senior family members and the concerns of influential
clerics. As a result, political change will remain gradual and piecemeal. Some dissatisfaction with the rule of the Al Saud
family will persist, centring on discontent over perceived corruption, the country's relations with the US and youth unemployment.
There is an ongoing risk of violent attacks by militant groups on both government and Western targets. Within the region,
Saudi Arabia's increasing wealth (and foreign-aid largesse) will continue to bolster its position as a diplomatic heavyweight.
The government is concerned about the possibility that Iran might obtain nuclear weapons, but would be unlikely to support
military efforts to prevent this. Economic growth will remain robust in 2008-09, driven by strong government spending, rising
foreign investment and an expected pick-up in oil output. Continued high oil prices will also generate large current-account
and fiscal surpluses. Inflation will remain low by regional standards, mitigating pressure for a revaluation of the Saudi
riyal's peg to the US dollar.
The economic policy outlook is largely unchanged. Reducing Unemployment and diversifying the economy away from oil, while
also increasing both crude and refined oil output capacity, will remain the key policy goals.
Economic forecast
We have rolled our economic forecasts forward by one year this month. Real GDP growth is forecast to rise by 5.6% in 2009,
little changed from the rate expected in 2008.
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