Saudi Arabia's economy is reasonably insulated from the regional turmoil and the central bank has seen no abnormal capital outflows, its governor Muhammad al-Jasser said on Sunday. Revolts have been sweeping through the Arab world since December, shaking the world's top oil exporter's neighbours Bahrain, Oman and Yemen, while raising debt insurance costs and pressuring markets across the Gulf.
When asked about the impact of the regional turmoil on the economy and capital flows, the Saudi central bank governor told reporters: "I think very little because simply, economically you have to look at what you are exporting and importing."
"I have checked all the numbers and there has not been any noticeable outflows or abnormal outflows in Saudi Arabia during the past few weeks so it has been normal business," he said on the sidelines of a financial conference.
With investors worried by the regional unrest, Saudi one-year currency forwards held near their highest levels since January 2009 over past weeks, pointing to a weakening in the riyal, which is pegged to the dollar, over the next 12 months.
Saudi five-year credit default swaps have eased from February highs, but still remain some 74 percent above levels seen in January before protests began in Egypt.
Saudi Arabia, a US ally and top Arab economy, has escaped the mass uprisings but some dissent has built up in the kingdom, whose economy expanded by 3.8 percent in real terms last year.
On Sunday, dozens of Saudi men gathered outside the interior ministry in Riyadh undeterred by a heavy police presence, to demand the release of jailed relatives.
However, Saudi stocks gained as much as 5.7 percent on Sunday, boosted by new social spending worth $93 billion, offered by King Abdullah to ease tensions in the desert kingdom, where more than 10 percent of Saudis are without a job.
The overall social package amounts to nearly 30 percent of economic output when combined with an estimated $37 billion worth of handouts announced last month.
Analysts polled by Reuters before the latest spending plan was released had expected the Saudi economy to expand by 4.5 percent this year.
Comments
Comments are closed for this article.