Saudi Arabia will increase spending by 4.3 per cent in 2014 as it continues to generate huge revenues from its oil exports.

Riyadh will spend SR855bn ($228bn) in 2014, with the main focus on improving infrastructure such as airports and roads as well as build up industrial areas across the country. Social welfare spending is also expected to continue with a continued focus on housing and education as well as continued efforts to lower unemployment, which currently stands at 12 per cent, more than 4 per cent higher than the OECD average.

The kingdom’s Finance Ministry announced revenues from exporting oil and other products of $301bn for 2013. This is about $35bn down on the record revenues of 2012, but still reflective of $100-plus oil prices coupled with increased production brought about by the continued sanctions against Iran.

The Middle East’s largest economy recorded growth of 3.8 per cent in 2013, well above the average of 2.7 per cent that is forecast for the OECD. Non-oil sectors enjoyed growth of 4 per cent. Private-sector growth increased by 5.5 per cent.

The increase in spending by Riyadh has slowed in comparison to 2013 when it was increased by 18 per cent compared to 2012.

Riyadh is expecting revenues to decrease by about 25 per cent in 2014, dropping to about $225bn. The main reasoning behind the forecast is the expected drop in crude oil prices with several industry experts predicting that Brent crude could dip below $100 a barrel for the first time in three years.

Coupled with lower oil prices is the real prospect of lower oil production by the state-owned Saudi Aramco. Increased production from non-Opec countries such as Canada and the US alongside Iran ramping up production as a result of the easing of international sanctions means the kingdom’s output should ease back toward the 8 million barrels-a-day mark.

About 90 per cent of the kingdom’s revenues are derived from oil exports.