Domestic demand to be driver of growth in Saudi Arabia from 2007-2010

Domestic demand is said to be the main driver of growth in Saudi Arabia for the period 2007-2010, as per a report by Jadwa Investment. As per the report, mega project implementation and broad liberalisation will drive real non-oil private sector growth up to an average of nearly 8% with growth being fastest in manufacturing, communication, finance and construction. Manufacturing is forecast to be the fastest growing sector in the period, led by petrochemicals. The petrochem sector is to be dominated by Saudi Basic Industries Corp. (Sabic), that has 3 petrochemical projects due onstream in the same period. The 3 mega projects are : Yanbu National Petrochemical Co. (YANSAB), Eastern Petrochemical Co. (SHARQ) and Saudi Kayan Petrochemical Company (Kayan). Saudi Aramco, through its US$10 billion Petro-Rabigh complex, estimated to commence production around 2009, will foray into this segment. The investment boom would provide a supportive backdrop for transport and communications. The recent deregulation should make this sector grow by over 9% pa over the period. Finance is expected to be one of the most dynamic sectors over the next five years. Recent liberalization has opened the banking and insurance industries and forthcoming legislation is set to boost the nascent mortgage market. The main beneficiary of this will be the construction sector. The report said that new investment will support solid growth in electricity, gas and water. A model for private sector participation via independent water and power projects has been developed and several major projects are under way.
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