Macroeconomic Forecast Saudi Arabia

The stock market downturn poses a downside risk to private consumption and investment, but this is outweighed by the strong upside risks implied by our higher oil price forecasts. We have left our forecasts of 5.7% growth in 2006 and 5.2% in 2007 unchanged for this month and will factor our oil desk's new oil price forecasts in next quarter. Our forecasts assume that Saudi production averages 10.75mn b/d in 2006, only 0.5% higher than the 10.7mn b/d output estimated in 2005. As ever, there are risks from OPEC policy decisions, though in our view the strong price outlook means OPEC will retain a liberal output policy. According to latest data from the International Energy Agency, Saudi Arabia was producing 9.45mn b/d in February.

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