RIYADH, (AFP) — Saudi Finance Minister Ibrahim al-Assaf said on Sunday that world governments need to keep up their stimulus spending through 2010 to avoid a double-dip recession.
“At this time I don’t think it’s the time to curb spending. It could lead to another dip in the world economy,” Assaf told the Global Competitiveness Conference, an annual gathering of Saudi and world businessmen in Riyadh.
“2010 is a year in which we need continuous stimulus spending,” he said.
World governments pumped hundreds of billions of dollars in stimulus packages in the wake of the global financial crisis in late 2008 and many maintained higher spending levels last year.
However, Assaf, who represents his country at the G20 group of leading economies, cautioned that after this year the world needs to be cautious about the possible negative effects of over-spending, such as unleashing inflation and sparking new sovereign debt problems.
“At some time we will need to cut back,” he said.
Assaf also suggested that the International Monetary Fund’s 4.0 percent growth forecast for the Saudi economy this year could be slightly low, though he declined to offer his own projection.
The economy of Saudi Arabia, the world’s largest crude exporter, ended last year almost flat in real terms while its nominal gross domestic product slumped over 21 percent due to a sharp drop in oil revenues.
The kingdom posted a 12-billion-dollar deficit last year, the first shortfall since 2002. It is projecting an 18.7-billion-dollar deficit for the current year.
However, it has earmarked 144 billion dollars for public spending this year, the highest ever in the kingdom’s history.