Saudi economy grew 5.1% in 2012

Saudi Arabia's economy grew by 5.1 percent in 2012, and the Kingdom has been one of the best performing G-20 economies in recent years, thus supported global economy through its stabilizing role in the global oil market. The International Monetary Fund (IMF), in a report released here Sunday, Saudi Arabia's Generous financial support has also been provided to countries in the Middle East region. It added that the Saudi economy grew by 5.1 percent in 2012, benefitting from high oil prices and output, strong private sector growth and government spending. Inflation has risen over the past year to 3.8 percent in May 2013, driven by higher food prices and housing costs. High oil prices and production led to large fiscal and current account surpluses, and international reserves rose further. Credit growth has remained strong, and the banking system is well-capitalized and profitable, with Basle III capital standards implemented in January 2013, said the IMF. Following an expansionary fiscal stance in 2011, government expenditure growth slowed in 2012 and the non-oil deficit began to narrow. Consistent with the exchange rate peg, monetary policy settings have remained unchanged. IMF projected growth to slow to four percent in 2013. Private sector growth is expected to be strong, but oil production is likely to be below 2012 levels while government spending growth may slow. Inflation, it added, was expected to ease toward year-end in line with declining international food prices. With oil prices and production expected to be lower, fiscal and external surpluses, while remaining large, are projected to narrow this year. The Saudi population is young and increasingly well-educated, and as it continues to enter into its working-age years, there is a tremendous opportunity to boost growth and raise living standards further. The Saudi government is continuing to implement initiatives to boost the employment of nationals, increase supply of housing, improve infrastructure, particularly in the area of transportation, and develop the small-and medium enterprise (SME) sector, said the IMF report