RIYADH (AFP) – Saudi economic growth in 2010 could hit 3.5 percent on the back of heavy government investment spending, the country’s central bank governor said on Sunday.
Mohammed al-Jasser, governor of the Saudi Arabian Monetary Authority (SAMA), said growth would surge for the oil export giant after a sparse increase of 0.6 percent in 2009.
The estimate was cautious compared to private sector projections — in a report on Saturday, Al-Rajhi Capital forecast 2010 growth at 3.9 percent.
Government spending, mainly a 400-billion US dollar surge in investment into infrastructure, schools and the military over 2009-2013, is driving the economy of the world’s leading oil supplier, according to economists.
Jasser also downplayed the threat of inflation, which surged to 6.1 percent year-on-year in August and sparked a chorus of complaints from consumers, especially over higher food prices.
“I think also it is premature to make conclusions this early on the trajectory of inflation,” Jasser said at a news conference.
He said “seasonality” — a reference to the big spending on food that takes place during the holy month of Ramadan, which ended on September 9 — was a component in the jump in prices.
He also said the sharp rise worldwide in key food commodity prices such as wheat had been an important cause in the surge of prices.
Nevertheless, he said, SAMA and other government departments have been “very active” in coordinating over fiscal policy to keep a rein on inflation.
Al-Rajhi forecast inflation falling off to a 5.5 percent annual rate by the end of the year.