2011 growth figures were a happy surprise for us Saudi officials (Photo: Reuters)
Saudi Arabia's strong economic growth this year was a positive surprise, Finance Minister Ibrahim Alassaf said on Tuesday, adding that the government's plans to build hundreds of thousands of homes aimed to limit future inflationary pressures.
The ministry estimates that gross domestic product of the world's top oil exporter jumped 6.8 per cent in 2011, it said on Monday. This is the country's fastest expansion since 7.7 per cent in 2003.
"In previous years, we used to expect higher growth but it came lower. Figures this year were a happy surprise for us," Alassaf told Al Arabiya television.
"Growth was higher than our expectations mainly in the private sector and industrial sector."
The ministry estimates the government sector grew 6.7 per cent this year while the private sector expanded 8.3 per cent. The non-oil industrial sector grew an estimated 15 per cent, and the construction sector 11.6 per cent.
The ministry's 2011 GDP growth estimate is well above the 5.1 per cent forecast made by the central bank in its annual report released earlier this month.
The Saudi government boosted expenditures to a record 804 billion riyals ($214 billion) this year, a 39 per cent increase over its initial plan, to ease social tensions as a wave of unrest swept through the Arab world. Its initial plan is to spend 690 billion riyals in 2012.
Alassaf also said on Tuesday that the government's plan to spend on building new housing units, announced earlier this year, should reduce price pressures in future.
"Increases in spending sometimes aim to eliminate pockets of inflation or target the sources of pressure on inflation. In the case of Saudi Arabia, this has been for many years the increase in housing rental fees, and that is why we came up with the plan to build new units to minimise accumulating pressures," he said.
"The economy can withstand temporary pressures if pressures ease in the future."
Inflation is expected to average 4.7 per cent this year, the ministry said on Monday, below 5.3 per cent in 2010.
On Monday, the finance ministry said it had set aside 250 billion riyals from the 2011 budget surplus to fund the construction of 500,000 homes.