RIYADH, (Reuters) – Saudi Arabia’s gross domestic product is expected to grow by more than 4 percent this year, stronger than in 2010, while OPEC’s top oil exporter will remain “vigilant” on inflation, its finance minister said.
“I expect GDP growth to be above four percent this year,” Ibrahim Alassaf told reporters late on Saturday, adding that he also expected credit growth to pick up in 2011.
“There is a continuation of growth seen in the past years,” he said.
In 2010, the biggest Arab economy grew by 3.8 percent in real terms, the government said in December when unveiling its straight third record budget based on planned spending.
Assaf said inflation was easing a bit but the member of the G20 group would remain vigilant.
“We have to be vigilant about inflation. I can see some easing at bottom legs but again we have to be careful,” Assaf told reporters on the sidelines of the start of the Global Competitiveness Forum in the Saudi capital.
Annual inflation eased to 5.4 percent in December from 5.8 percent in November but a rise in global food prices might add to price pressures in the desert kingdom reliant on imports, economists say.
To buffer a global spike and serve its rising population as more expatriates move in the kingdom said earlier this month it would double wheat reserves to a year’s worth.
Assaf said the Gulf Arab state would continue its $400 billion state investment plan — the world’s biggest stimulus relative to GDP — until 2013 as planned but would watch out for any inflationary pressures building up.
“It’s a continuous process. If we see there is a need given the price level pressures then we could reduce it gradually,” he said.
Banque Saudi Fransi Chief Economist John Sfakianakis said the kingdom would see solid growth in 2011 with a pick-up in the non-oil sector and also private credit growth which was 5.9 percent last year.
“High government spending is not leading to inflationary pressures despite the rising investment programme,” he said.
“Existing inflationary pressures are due to mainly rental costs and food price which have been rising due to global trends,” Sfakianakis said.
Separately, Interior Minister Prince Naif bin Abdulaziz reiterated the kingdom always seeks to moderate oil prices by balancing the needs of consumers and producers.
“Throughout its history the kingdom has sought to moderate prices with its oil policy,” he told government officials and executives at the opening ceremony.
Brent crude futures rose above $97 a barrel on Friday as confidence in a European recovery boosted the euro to a two-month peak against the dollar.