IMF: Saudi Arabia Seen Growing At 6% In 2012

Saudi Arabia–the world’s largest exporter of oil–is expected to grow by 6% this year on the back of strong crude prices and prudent economic management, the International Monetary Fund said Tuesday. The Middle Eastern country boosted oil production this year to help ease pressures on prices as geopolitical tensions escalated over Iran’s alleged nuclear weapons program. Also, Riyadh’s increase in government spending amid accommodative monetary policy has helped fuel the country’s non-oil economy. The IMF warned, however, that while inflation expectations remain “modest,” at 5% for 2012, authorities should monitor consumer prices carefully for signs the economy is overheating. In its annual review of the country’s economy, the IMF estimated 2011 growth for Saudi Arabia at 7.1%.

The fund encouraged Saudi Arabia to continue to take advantage of the strong state of the economy to advance its economic reform agenda and further strengthen institutions it needs for sustained growth.

“Targeted government investment alongside product and labor market reforms can facilitate a more dynamic private sector and stimulate job creation for nationals,” the IMF said.