Country Report Saudi Arabia May 2011

Outlook for 2011-15: External sector

We expect Saudi Arabia to return narrowing current-account surpluses over the forecast period, as strong domestic demand sucks in imports. International oil prices are expected to average US$83/barrel in 2011-15, which should be sufficient, combined with gradually rising oil production, to keep the trade balance comfortably in surplus. This will offset persistent deficits on the services and current transfers accounts. Income from investments abroad has been sustained through the global economic slowdown, and we expect the income account to return widening surpluses over the forecast period. Rising domestic fuel consumption, weak global demand for oil and declining international oil prices will lead to a decline in export earnings during the middle part of the forecast period. The current-account surplus is forecast to widen to 22.9% of GDP in 2011, but to narrow steadily in subsequent years, declining to 6.5% of GDP in 2015.

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