JEDDAH: Saudi Arabia's GDP is growing by 6.5 percent this year from 4.1 percent in 2010 on the back of higher oil income and increased government spending, but added that inflation would rise to about 6 percent around too, the International Monetary Fund (IMF) said Tuesday. Government data on May 14 showed annual inflation rose to 4.8 percent in April due to higher food and transport costs. "The economy is poised for continued robust growth," the IMF said in a statement. Oil production is increasing further to compensate for lower output elsewhere in the region," the IMF said, adding that both fiscal and external balances in Saudi Arabia are likely to register strong surpluses amid an increase in oil production. “The Saudi economy has continued to strengthen in 2010 and early 2011, driven by a strong increase in non-oil GDP reflecting a rebound in the private sector supported by increased government spending and a recovery in global demand and higher oil prices as the world economy emerges from the global financial crisis,” Ahmed said. Data from the Saudi Arabian Monetary Agency (SAMA) showed that the value of point-of-sale transaction in April increased by 58 percent year-on-year. “The banking sector continues to hold capital above statutory requirements and credit growth is rising. With government spending and oil production now also increasing, available leading indicators point to a further strengthening of activity in the first quarter of 2011,” he added. Key steps will be to continue progress in diversifying the economy building on the positive business environment, and continuing to improve access to finance for SMEs as well as for housing. The upswing in consumer confidence showed consumers were willing to make big-ticket purchases.
