The Saudi Arabian Monetary Agency (Sama) has shocked economists by releasing a forecast for gross domestic product (GDP) growth of 5.1 per cent for 2011, below the expectations of many analysts.

Sama’s forecast compares with the 7.5 per cent growth expected by the IMF. Analysts at the UK’s Barclays Capital say Sama is underestimating the growth rate attributable to the oil sector, which they think will grow 8.9 per cent in 2011, compared with Sama’s forecast of 4.9 per cent.

Sama expects the kingdom to have a budget surplus of SR378.2bn ($103bn) at the end of the year, compared with the IMF’s forecast of SR429.2bn.

Although the figures show that the Saudi economy is recording strong growth despite the challenging global environment, it also shows the government is increasingly the driver of the economy. Coupled with the strong performance of the oil sector, the non-oil government sector recorded growth of 6.5 per cent, compared with non-oil private-sector growth of 4.4 per cent. Overall Sama expects the non-oil sector to grow by 5.4 per cent in 2011.

“We expect that the implementation of the fiscal packages announced in February and March 2011, amounting to $126bn, or 25 per cent of GDP, to have a significant spillover into the non-hydrocarbon sector and elevate it by 5.2 per cent year-on-year in 2011,” says Barclays Capital.

The bank goes on to say that oil production levels will be flat in 2012, at about 9.2 million barrels a day (b/d), which will result in oil-sector growth of 0.4 per cent, bringing overall growth down to 4 per cent.

Saudi Arabia is expected to announce its 2012 budget before the end of the year. The budget will be closely watched for more details of how Riyadh plans to disperse the $130bn it said it would spend on investing in infrastructure and improving the livelihoods of its citizens. It will also give clues as to how well the country is performing compared with the targets set out in the Ninth Development Plan, which covers the 2010-14 period. According to that plan, average GDP growth for each of the five years should be 5.8 per cent, which Sama is forecasting will be missed this year. In 2010, Sama said GDP growth was 4.1 per cent, also falling short of the government’s target rate.

The figures released by Sama also illustrate that dollar liquidity in the Saudi banking system has been getting worse. Between 2009 and 2010 local currency deposits in the banking system rose from 82.9 per cent to 87.5 per cent, while access to international markets became more difficult.

Local currency liquidity is still very strong. Credit growth to the private sector rose by 10 per in October, up from 9 per cent in September, while the loan to deposit ratio rose marginally to 79.7 per cent from 79.4 per cent in the previous month. Deposits rose by 13 per cent in October. Local currency liquidity in the Saudi banks still tends to be much higher than in the rest of the region, allowing credit growth to be much faster. Economists expect credit growth in the kingdom to average about 10 per cent for the year, with a similar level in 2012.

Muhammad al-Jasser, the governor of Sama has been appointed economy and planning minister on 13 December, and Fahd bin Abdullah bin Abdullatif Al-Mubarak will take over as head of the central bank. Al-Mubarak was previously the head of Morgan Stanley Saudi Arabia.