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Saudi Arabia Captures 60-70% of GCC FDIs


Middle East : 08 March 2012

Source: Zawya

Saudi Arabia’s economy has recently witnessed robust growth and, consequently, flow of foreign direct investments (FDIs) continued and captured the highest rates of the FDIs in the Gulf region by 60-70 percent, according to a report.

The report, issued by Global Investment House (Global), says the rate of Saudi gross domestic product (GDP), which stood at 3.3 percent during the past decade (2011-2010), hit 6.8 percent in 2011 compared to 3.8 percent in 2010.

Nonoil sector GDP grew by 14.2 percent in 2011 compared to 9.1 percent in 2010 thus exceeding the growth rates registered during the last five years which stood at 7.7 percent, the report said.

Based on the fact that the oil sector GDP growth was as high as 41 percent, contribution of nonoil sector to the GDP dropped from 49 percent and 47 percent in 2010 and last five years, respectively, to 44 percent in 2011, according to the report.

The Kingdom is following the right step aimed at diversifying its economy as it continues to receive flow of foreign direct investments and, reportedly, capturing between 60-70 percent of the GCC total FDIs. The rate of FDIs to Saudi GDP fell to 6.5 percent in 2010 compared to 9.5 percent in 2009, the report says.

The nominal GDP grew by 29 percent in 2011 due to the increased contribution of mining and quarrying sectors to the GDP which grew by 41 percent. On the other hand, increasing of oil production and its higher prices contributed notably to upward trend in GDP by 70 percent.

The sector of downstream industries registered high growth rates by 28 percent, which is the second largest sector contributing to GDP growth at 10 percent, according to the report. Governmental service sector, which grew by 15 percent, contributed by 8 percent to GDP growth.

Gradual fall of financial services’ contribution to GDP over the past decade was attributed to the rapid growth of other components of nonoil sectors in addition to the increased oil sector contribution to GDP since 2001. Contribution of financial services to GDP stood at 18% in 2001 down to 16 percent in 2010 and finally stood at 15 percent in 2011.

Regarding total fixed capital formation, Saudi Arabia witnessed remarkable increase in capital formation which grew by 4 percent in 2010 and reached as high as 18 percent in 2011, the report said.

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