Saudi Arabia

Saudi Arabia’s economy looks set for a period of sustained growth, with oil revenues remaining high, non-hydrocarbons exports on the rise and the effects of a massive investment programme by the state starting to kick in.

Saudi Arabia’s petrochemicals industry is about to get a massive boost, with a new $20bn plant in the works and extensive state spending on infrastructure set to further improve the nation’s logistics backbone. Before the full benefits are realised, however, the sector may have to endure a down period as the recovery of the global economy continues to falter.

The Kingdom’s banks are moving toward the second half of 2011 in a strong position, but their ongoing conservative positions have triggered criticism. Saudi Arabia’s financial institutions are cashed up with healthy levels of liquidity, operating in a secure and growing economy, and have shown new earnings and investment potential. Despite this, there have been calls for the Kingdom’s lenders to be more active in advancing credit, after two years of building up reserves.

With a new mortgage law in the works and government plans to spend nearly $70bn on low-income housing, Saudi Arabia’s real estate market appears on track for a period of expansion.

Plans by the Saudi Arabian government to boost public expenditures and invest in the nation’s infrastructure could prompt local companies to step up their own investments. As Islamic financial services expand in the Kingdom, some of these borrowers may well turn to sharia-compliant bonds as a means of finance.

Saudi Arabia is embarking on a massive programme to boost its logistics and cargo-moving capacity as part of a much larger scheme to broaden the base of the economy and pave the way for future expansion.