Outlook for 2011-15

• The rule of the Al Saud family will remain secure in 2011-15, although the complex issue of succession will become increasingly prominent.
• Some resentment of Al Saud rule will continue, but this is unlikely to translate into organised movements. There is some risk of a conservative backlash against socially liberalising reforms.
• The government's political effectiveness will be constrained by the need to build consensus among elites and by the vast and inefficient bureaucracy.
• Saudi Arabia's key strategic partner will remain the US, and the two countries' interests will remain broadly aligned in terms of curtailing the influence of Iran, particularly in Iraq and Lebanon, and preventing state collapse in Yemen.
• The government plans US$373bn of investment over the next five years, which will help to support average real GDP growth of 4.2% a year in 2011-15.
• We have raised our forecast for the fiscal surplus, to an average of 4.9% of GDP in 2011-15, owing to an upward revision to our oil price expectations.
• The riyal is forecast to remain pegged to the US dollar in 2011-15 at its current level. A single Gulf currency is in preparation and may be in place in 2014-15.
• We forecast that the current-account surplus will narrow from 15.6% of GDP in 2010 to 7.2% of GDP in 2015, assuming slow growth in world oil demand.

Monthly review

• Saudi Arabia's response to the spate of social unrest in North Africa and elsewhere has fluctuated significantly. Having initially welcomed the revolution in Tunisia, it has since firmly sided with the status quo.
• Local officials have faced renewed public criticism as a result of another round of flooding following heavy rain in the Red Sea port city of Jeddah.
• Saudi Arabia has announced that its effort, in co-ordination with Syria, to mediate an agreement in Lebanon will end for the time being, after it failed to prevent the collapse of the national unity government.
• Hopes that the Saudi stock exchange (Tadawul) is considering opening the Saudi bourse to direct investment from abroad have been dampened by the head of the Capital Market Authority.
• Saudi Aramco has reportedly issued two contracts to expand and build a refinery in Yanbu and Jizan, respectively.
• With a contract to develop the large offshore Wasit gasfield expected soon, the need to resolve internal differences over allocations and pricing of natural gas is becoming ever more urgent.