Economy Still Needs Stimulus

RIYADH: Finance Minister Ibrahim Al-Assaf said Sunday the Kingdom will continue to pump money into the economy even as it rebounds from last year’s stagnation. The minister was delivering the keynote address at the Global Competitiveness Forum here.

“At one point, there will be a curbing of spending, but in my view 2010 is a year that needs continuous stimulus to the economy,” said Al-Assaf, on the second day of the forum. “Stimulus packages shouldn’t be withdrawn prematurely nor should they be extended more than required so as not to produce inflationary pressures.” Saudi Arabia expects growth of over 4 percent in 2010, said the minister. The country’s economy expanded by 0.15 percent in 2009.

Al-Assaf voiced his concerns over the weak business entities that have failed to cope with the biting economic recession. He pointed out that the Kingdom posted $12-billion deficit last year, the first shortfall since 2002.

Reacting to Al-Assaf’s statement, John Sfakianakis, group general manager and chief economist at Banque Saudi Fransi, said: “The Saudi economy has demonstrated far greater resilience and stamina compared to many G20 countries. The fiscal stimulus of Saudi Arabia is carried out without burdening the debt situation of the country. Saudi Arabia’s economy will grow no doubt in 2010 as confidence, lending and private sector appetite are rising.”

The governor of Saudi Arabian Monetary Agency (SAMA), Muhammed Al-Jasser, said the road to recovery for the global economy will be a long one given the depth of the financial crisis. “Given the enormity and the impact of the financial crisis on the global economy, the road to recovery will be a gradual process,” he said at the conference.

Al-Jasser said Kingdom’s growth in 2009 was “not bad.” “Put aside the oil sector, the rest of the economy continued to grow very comfortably,” said the SAMA chief. Nonetheless, 2010 should be even better because the fiscal stimulus seems to be still there and in the course of the year the global economic recovery should “reduce uncertainty for investors in Saudi Arabia,” he added. To this end, he noted that the Saudi Arabia’s benchmark Tadawul All Share Index jumped 27 percent in 2009 and gained another 2.8 percent this year.

Referring to the problems faced by Dubai, James Wolfensohn, former World Bank president, said that Dubai’s recent financial woes were the result of over-leveraging, reliance on continuous economic growth and too rapid a rate of development. “I think the leadership in Dubai had all the right objectives in terms of building an economically competitive environment without the benefit of hydrocarbons,” said Wolfensohn.

Abdul Aziz Al-Tamami, chief operating officer of Etihad Etisalat (Mobily), spoke about Mobily’s pioneering concept of caring for its employees, their needs and their aspirations, a concept he said Mobily was among the first to adopt in the Middle East and the Arab world.

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