Holland Gulf Chamber of Commerce » economy

Prince Sultan: Tourism a major contributor to Saudi economy

jochemgeheniau — Fri, 08 Nov 2013 08:09:55 +0000

Saudi Arabia enjoys economic and financial stability under the leadership of Custodian of the Two Holy Mosques King Abdullah, said Prince Sultan bin Salman, president of the Saudi Commission for Tourism and Antiquities (SCTA).
He was speaking to newsmen at the Fifth G-20 Tourism Ministerial meeting in London on Monday.
“Our country enjoys the benefits of resources, which are being used in its development and in the service of its citizens,” said Prince Sultan.
He said that his country’s participation in the ministerial meeting reflects Saudi Arabia’s economic position in the world and especially given the unprecedented growth in the areas of human, political and infrastructural developments that are taking place simultaneously.
Prince Sultan described Saudi tourism as a major contributor to the national economy and said it has been classified as an essential services sector globally. He noted that Saudi Arabia sees a huge market potential in this sector.
“Saudi Arabia, where the Two Holy Mosques are located, is a major travel destination for Arabs and Muslims around the world,” Prince Sultan elaborated.
According to Prince Sultan, the G-20 tourism ministerial meeting aims, among others, to set a common goal among nations wishing to promote tourism as a major sector of the economy intertwined with other sectors such as security.
He pointed out that the global tourism industry has become an essential component in the success of any economy in the world while also providing job opportunities to young men and women.
Prince Sultan revealed that he presented a number of issues at the meeting, including facilitation of tourist visas and matters related to security. He stressed that his country’s priority is domestic tourism which will cater to the guests of the Two Holy Mosques.
Being a spiritual hub where Muslims perform their religious duties and embark on sight-seeing, Saudi Arabia has promoted tourist facilities considerably, he added.

GCC emerging as an attractive investment destination

jochemgeheniau — Thu, 07 Nov 2013 09:48:46 +0000

JEDDAH – “GCC offers strategic advantages, such as availability of cheap energy and feedstock supply, low tax environment, well-developed infrastructure, growing population and increasing income levels, conducive for the development of various industries in the region. All these advantages if properly showcased could attract substantial investment flows from Indian corporates, who are looking to expand their global footprints and scouting for distinctive cost advantages to remain globally competitive,” said Sameena Ahmad, Managing Director, Alpen Capital.
“The GCC is emerging as an attractive investment destination for Indian companies. We as Alpen Capital specialize in the GCC-India corridor and have concluded several transactions in this sphere. There are several opportunities that exist in the GCC for Indian companies and we see a lot of interest from Indian corporates to establish a presence in the GCC. This trend is on the rise and we will continue to work closely with our clients and the respective governments to facilitate these transactions,” said Sanjay Vig, Managing Director, Alpen Capital.
A variety of catalysts for investment growth exist in GCC. While the oil industry is undeniably a pillar for the GCC economies, the region’s priority is to achieve sustained economic growth through development of non-oil sectors. This can be achieved by increasing private sector participation, strengthening local technological capabilities, developing a skilled workforce, improving the competitiveness of exports in global markets and by attracting substantial overseas investments.
Continued government spending to boost competitiveness, self-reliance and developing local skilled work force would offer potential investment opportunities in sectors such as Petrochemicals, fertilizers, plastics, pharmaceutical, sugar refining, aluminium & steel. In addition government support and infrastructure is expected to grow in sectors such as Information & Communication technology (ICT) and agriculture, food processing, education, financial services and EPC.
GCC offers substantial cost advantage for industries like petrochemicals, fertilizers, pharmaceuticals and metallurgy among others, as the region boasts of one of the lowest energy costs globally due to abundant availability of resources. Natural gas prices in GCC range between $0.8-1.5 per million British thermal units (mmbtu) compared with the global average of $4.0-6.0 per mmbtu. The availability of low-cost feedstock provides the region with distinctive competitive advantage. Average electricity prices for end users in GCC states are much lower at $3.7cents/kWh compared to countries that enjoys the reputation of being generation powerhouses ($10.5cents/kWh in USA and $9.4cents/kWh in China).
GCC’s twin surplus condition leads to economic stability: GCC’s large fiscal surplus (averaging ~9.2 percent of GDP over 2007-11) and trade surplus (averaging ~ 16.9 percent of GDP over 2007-11), low levels of public debt (averaging ~4.5 percent of GDP over 2007-11), and low external debt translate into a better rating, in terms of macro-economic health, than developed counterparts. On the other hand, economic diversification initiatives, growth in non-hydrocarbon sectors, pegged currencies, large forex reserves, well-developed infrastructure, and a moderate inflation environment provide an overall attractive business environment vis-à-vis emerging economies.

Saudi tourists spent £78m in London in 2012

jochemgeheniau — Fri, 30 Aug 2013 12:18:25 +0000

Initial estimates on foreign tourist purchases in London during this summer season are estimated to be worth £4 billion. Official statistics have not yet been disclosed.
The contribution of Arab citizens to this figure is estimated to be worth £1.3 billion, says the British Commercial Association.
The average spending of a Saudi tourist reached about £2,487, followed by that of the UAE at £2,395, then Kuwait at £1965 per head and Russia and Singapore at £1169 and £980 per head.
There has been a 36-percent increase in sales due to the contribution of Arab tourism in London. This is translated to a 13.5-percent increase in employment rates.
The positive effects of Arab tourism in the UK are not confined to the huge revenues reaped by shops and businesses as a result of Arab procurement, but also contributed to the revival of the hospitality sector as well.
Simon Jack, public relations officer at The Leonard Hotel Marble Arch in central London, said that GCC tourists, in particular those coming from Saudi Arabia and UAE, as well as Libya, spend long periods in London during the summer.

Jack said, “Some families spend more than three consecutive months sometimes.”
The phenomenon has prompted many hotels to offer services in the Arabic language and allocate spaces for prayers. London-bound Gulf tourism has raised rates of hotel occupancy.
Jack said: “Last year, estimates indicated that Saudis alone spent £78 million on hotel stays in London. They are expected to spend between £93 and £101 million this year.”
Most GCC tourists prefer to stay in apartments in central London. “This offers them more privacy and allows big and extended families to rationalize in expenditure,” he said.
Amid the huge spending by GCC tourist, the British government stands out as one of the biggest beneficiaries of these financial returns via the many channels available, mainly through taxes.
Peter Dey, tax expert at HM Revenue and Customs Department, said that tax benefits from GCC tourists to the British economy are categorized into several categorizes.
Dey said: “There is always this competition between Gulf and Russian tourists on who spends more during the season.
“But tourists coming from Russia, Hong Kong and Singapore are keen on restoring what they have paid in taxes as soon as they leave London because they are entitled to regain the proportion of taxes they paid while shopping according to the British law, unlike GCC tourists who often don’t bother to keep their invoices.”

KSA one of best performing G20 economies: IMF

jochemgeheniau — Mon, 15 Jul 2013 08:38:52 +0000

RIYADH – The International Monetary Fund (IMF) confirmed that the Kingdom has been one of the best performing G20 economies in recent years and has supported the global economy through its stabilizing role in the global oil market.

The IMF also pointed out to the positive outlook of the Saudi economy which grew by 5.1 percent in 2013, benefitting from high oil prices and output, strong private sector growth, and government spending.

This came in a press release issued by IMF Executive Board after it concluded 2013 Article IV Consultation with Saudi Arabia.

Credit growth has remained strong, and the banking system is well-capitalized and profitable, with (Basle III Capital Standards) implemented in January 2013. Following an expansionary fiscal stance in 2011, government expenditure growth slowed in 2012 and the non-oil deficit began to narrow. Consistent with the exchange rate peg, monetary policy settings have remained unchanged.

Inflation has risen over the past year to 3.8 percent in May 2013, driven by higher food prices and housing costs. High oil prices and production led to large fiscal and current account surpluses, and international reserves rose further. Looking ahead, growth is projected to slow to 4 percent in 2013. Private sector growth is expected to be strong, but oil production is likely to be below 2012 levels while government spending growth may slow.

Inflation is expected to ease toward year-end in line with declining international food prices. With oil prices and production expected to be lower, fiscal and external surpluses, while remaining large, are projected to narrow this year.

The press release said the IMF Assessment Executive Directors also welcomed the continued strong performance of the Saudi Arabian economy and the systemic and stabilizing role that the country plays in the global oil market.

They also acknowledged Saudi Arabia’s role as an important source of financial assistance and remittances for many developing countries.

Directors welcomed the measures the Saudi authorities have undertaken to strengthen fiscal management.

The Saudi population is young and increasingly well-educated, and as it continues to enter into its working-age years, there is a tremendous opportunity to boost growth and raise living standards further.

Against this background, the government is continuing to implement initiatives to boost the employment of Saudi nationals, increase the supply of housing, improve infrastructure, particularly in the area of transportation, and develop the small-and medium enterprise (SME) sector.

IMF Directors welcomed the large investments in education aimed at strengthening the skills of the population.

Saudi nonoil exports reach SR 46.84 bn

jochemgeheniau — Wed, 26 Jun 2013 09:27:15 +0000

The value of Saudi Arabia exports of nonoil commodities for the first quarter (Q1) of the current year 2013, reached SR 46.84 billion, compared to SR 47.84 billion, or a decrease of 2.1 percent, according to the Central Department of Statistics and Information (CDSI).
The CDSI report stated that petrochemicals topped the list of Saudi exports as it valued SR 16.88 billion, or 36.05 percent of the total nonoil exports, plastic products came second at SR 14.31 billion or 30.55 percent, followed by ordinary metals and their products at 7.11 percent of the total exports.
According to the report, China topped the list of importers from Saudi Arabia during Q1 with 12.98 percent of the total exports, followed by the UAE at 11.31 percent and India at 5.79 percent.
The value of Saudi imports during the Q1 increased by 13.5 percent to reach SR 154.92 billion compared to the figures of same period of the previous year, the report said.
Equipment, machinery and electrical utensils topped the list of Saudi imports during Q1 as they valued SR 42.84 billion, or 27.65 percent of total imports, followed by transport materials worth SR 27.79 billion or 17.93 percent and metal products at SR 19.55 billion or 12.62 percent.
The largest exporter to the Kingdom in Q1 was the United States sending goods worth 13.32 percent of the total Saudi imports, followed by China at 12.5 percent, then South Korea at 6.62 percent, the report pointed out.

Saudi changes working week to Sun-Thurs – official statement

jochemgeheniau — Mon, 24 Jun 2013 07:55:24 +0000

Saudi Arabia on Sunday said it was switching its official weekend to Friday and Saturday, bringing the kingdom’s working week in line with other members of the six-nation Gulf Cooperation Council.

Saudi Arabia, the biggest Arab economy, had been the only Gulf Arab state to have a Thursday-Friday weekend after Oman shifted to a Friday-Saturday weekend last month.

A statement on national Saudi news agency SPA said the change, decreed by King Abdullah, will take effect as of this weekend, “for the sake of putting an end to the negative effects and the lost economic opportunities consistently associated with variation based on work days between local departments, ministries and institutions and the regional and international counterparts.”

King Abdullah issued the decree following a recommendation in April by the Kingdom’s Shura Council, which advises the government on new laws, to change the country’s official weekend from the current Thursday and Friday.

KSA’s banking system ‘safest in Arab world’

jochemgeheniau — Thu, 20 Jun 2013 07:36:40 +0000

Saudi banking experts here say that the Kingdom has the safest banking system in the Arab world. This comes in response to CNBC Arabia reporting earlier this week that the Kingdom recorded 5,000 fraud cases out of 1.3 million ATM cash withdrawals recently.
The experts say that the security of the Saudi banking system and its top ranking in the Arab world has been confirmed by the Financial Sector Assessment Program (FSAP), the International Monetary Fund and World Bank’s assessment of a country’s financial system.
The banking experts also expressed concerns about a proposal to launch a single Gulf Cooperation Council (GCC) banking system because of the alleged poor security standards of many banks in other GCC countries.
Talat Hafiz, secretary general of the media and banking awareness committee of Saudi banks, confirmed that Saudi Arabia ranked number one in the region, particularly for its ability to fight money laundering.
“Saudi Arabia’s banking system is considered the safest in the Arab world.” He said that Saudi banks still insist on customers updating their information in person rather than on the phone or online. “Saudi banks are applying the most well known international system to protect information and their databases,” he said.
“Despite the huge annual transactions in Saudi Arabia, there are very few complaints in terms of credit cards, visa cards, online payments, or ATM cash withdrawals.”
According to Hafiz, there have been less than 2,000 cases of fraud involving ATMs, despite the many machines across the country. He said most fraud cases have involved women involved in online shopping.
“We often advise women customers, who are involved in online shopping, to make sure they are doing transactions with genuine operators. We’ve noticed that most fraud cases have come from online shopping,” he said.
Hafiz said most Saudi banks offer integrated services including Internet banking, ATM and telephone-based services.
“Since more clients want to transact electronically, customers in Saudi Arabia are now moving into electronic banking, but the move is gradual. A lot of customers, especially elderly people, need to be aware of the electronic process.”
He said, however, that more awareness campaigns are needed to educate people about safe banking behavior.
Fadhul Albuainain, a banker and economics writer, said that money laundering and fraud cases would increase if the Kingdom joins other GCC banks in a single system.
He claimed that banking security in other countries such as Qatar and Kuwait is not strict, which has resulted in problems in those countries.
“Since we have a large number of expats, many ATMs and a huge number of transactions, it is dangerous to integrate with other banking systems in the GCC or other Arab countries,” he said.
“We have succeeded in fighting money laundering and financial fraud cases, unlike in the GCC and Arab countries.”

Qatar has the highest density of millionaires in the world: report

jochemgeheniau — Fri, 07 Jun 2013 08:14:17 +0000

Qatar has the world’s highest density of millionaires, with 143 out of every 1,000 households holding private wealth of at least $1mn, much higher than the global average, according to a report.
Qatar also ranks fourth in the world by ultra-high-net-worth (UHNW) households, defined as households with more than $100mn in private wealth, with eight out of 100,000 households falling under this category, the Boston Consulting Group’s (BCG) annual global wealth management report said.
“Qatar ranks first in the world with the highest density of millionaires, with 14.3% holding private wealth of at least $1mn. Kuwait ranks third with 11.5%, while Bahrain (4.9%) and the UAE (4%) rank seventh and ninth, respectively,” said Markus Massi, partner and managing director at BCG Middle East.
The report asserts that private wealth in MEA (Middle East and Africa) will grow to an estimated $6.5trn by the end of 2017, with a projected compound annual growth rate (CAGR) of 6.2%. This increase will largely be driven by new wealth creation linked to strong gross domestic product expansion in oil-rich countries.
“The growth of private wealth in the region has been largely driven by a buoyant GCC (Gulf Co-operation Council) equity market and an improvement in the global equity markets overall. Additionally, the recovery of the local real estate markets has helped to free up additional liquidity for financial investments,” the report said.
Wealth held in equities saw strong growth in 2012, although individual markets in the Gulf region posted sharply different results.
The Dubai Financial Market index enjoyed growth of 19.9% and the Abu Dhabi Exchange improved by 9.5%, while the other GCC bourses have seen moderate growth (6% for Tadawul) or as low as 2% in the case of the Kuwait Stock Exchange,” Massi said.
Globally, private financial wealth grew by 7.8% in 2012 to a total of $135.5tn. The rise was stronger than in 2011 and 2010, when global wealth grew by 3.6% and 7.3%.
The total number of millionaire households reached 13.8mn globally in 2012, or 0.9% of all households. The US had the largest number of millionaire households (5.9mn) overall, followed by Japan (1.5mn) and China (1.3mn).
“Globally, we anticipate that the affluent segment will continue to grow their assets. Over the next five years, wealth among households worth $5mn to $100mn will grow by a projected CAGR of 8%, while the ultra-high-net-worth segment is expected to see a CAGR of 9.2%,” Massi said.
The report said offshore wealth – defined as assets booked in a country where the investor has no legal residence or tax domicile – rose 6.1% in 2012 to $8.5tn. While offshore wealth is projected to rise modestly over the next five years, reaching $11.2tn by the end of 2017, wealth is increasingly moving onshore due to the intense pressure that tax authorities are exerting on offshore centres.

Total assets of ‘Top 100’ Saudi firms rise 35% to SR 3.1 trillion

jochemgeheniau — Mon, 27 May 2013 09:24:19 +0000

Total assets of ‘Top 100’ Saudi companies rose by 35 percent from SR 2.29 trillion in 2009 to SR 3.1 trillion in 2013, Al-Eqtisadiah business daily reported yesterday in its annual supplement on Top 100 Saudi companies.
The report showed the turnover of companies rising by 40 percent from SR 484 billion in 2009 to SR 676 billion.
Rights of shareholders grew by 22 percent during the same period from SR 664 billion to SR 809 billion while net profits rose from SR 61 billion to SR 107 billion, registering 75 percent rise during the past five years.
The supplement indicated improving performance of the listed companies as their profits grew continuously until 2012 to decline slightly in 2013. Return from the rights and investments of shareholders also increased, reflecting the strength and efficiency of the Saudi economy.
Petrochemical giant Saudi Basic Industries Corporation (SABIC) held the top position in the prestigious list with National Commercial Bank and Saudi Electricity Company holding the second and third positions.
Al-Rajhi Bank, Saudi Telecom Co., Samba Financial Group, Riyad Bank, Banque Saudi Fransi, Saudi British Bank and Arab National Bank grabbed their positions among the first top 10 companies.
Petrochemical companies performed well in the list, followed by cement firms and banks.
Transport, hotel, energy and media companies had low representation.
Saudi Research & Marketing Group improved its position from 77 in 2012 to 62 in 2013.
Yaseen Al-Jafry, a Saudi economist, emphasized the importance of the annual supplement on Top 100 Saudi companies, saying it gives an idea about the performance major companies, which naturally reflects the strength of the national economy.
He, however, pointed out that some well-known companies had opted to remain out of the informative list for reasons known to them.
He expected the list’s structure would change in the future with more family businesses intending to become holding companies.
SABIC and Saudi Electricity Co. (SEC) have maintained their top positions in the list for the last five years, reflecting their strength and good performance.
Kingdom Holding Company, which holds 13th position on the list, is up from last year’s 14th position.
Established about 35 years ago, SABIC has grown steadily to become one of the world’s top 100 companies.
The company has more than 40,000 employees and operations in over 40 countries around the world.
SABIC’s annual turnover reached SR 191.33 billion and total assets SR 338.43 billion, and net profit SR 24.78 billion in 2012. It is the market leader in producing mono-ethylene glycol, MTBE, polycarbonate, polyphenylene, polyetherimide and granular urea.
It has 60 world-class plants, 12 Technology & Innovation Centers in Saudi Arabia, the Netherlands, Spain, the United States, South Korea and India, with two centers under construction in China and India. It manufactures 150 new products each year and holds a portfolio of 8,000 global patents.
SEC plays an important role in the Kingdom’s development by meeting its energy requirements.
The total generating capacity of the company and other producers has increased from 24,000 MW in 2000 to nearly 54,000 MW.
It was successful in linking 98 percent of the Kingdom’s regions with an electricity network.
The number of electricity subscribers has increased from 3.5 million in 2000 to nearly seven seven million.
The demand for electricity is growing at the rate of nine percent annually as a result of a rise in population, and industrial and business activities.

Real GDP to grow by 4.4% in 2013

jochemgeheniau — Wed, 15 May 2013 13:51:51 +0000

Saudi Arabia’s real GDP is estimated to have expanded 6.8 percent in 2012, according to Global Investment House’s review of the Saudi economy.
Following the record oil production seen in 2012, the government has resorted to strong fiscal stimulus measures and greater investment in infrastructure projects. However, GDP growth is expected to lower to 4.4 percent in 2013, as oil production stabilizes and benefits of previous expansionary fiscal spending are realized. Real oil GDP expanded 10.4 percent owing to higher oil prices and record levels of production. The oil sector grew 5.5 percent in 2012, on the back of increased output following sanctions imposed on Iran in early 2012. However, the sector’s growth is expected to remain subdued over the next five years with minimal/no increase in production or capacity expansion, as higher output from Iraq, North America and Libya comes on stream.
Nonoil GDP growth expanded 7.2 percent in 2012, followed by its strongest performance (8.0 percent) in the last eight years in 2011, led by uniform growth in private and government sectors. The nonoil private sector continued its growth trajectory in 2012. It rose 7.5 percent, albeit lower than the 7.8 percent growth (its highest level in last eight years) in 2011, led by strong growth in manufacturing, construction, retail and transport sectors. Moreover, all sectors registered growth in 2012. The nonoil public sector’s growth continued to be robust in 2012; it rose 6.3 percent in 2012 after increasing 8.7 percent in 2011.
The nonoil sector is expected to primarily drive the Kingdom’s real GDP growth, as the government continues to take initiatives to diversify away from oil and address social and development needs. The nonoil private sector’s growth is estimated to stay above the real GDP forecast, with growth averaging above 5.5 percent.
Meanwhile, the nonoil public sector’s growth is expected to remain steady at 3.9 percent until 2017.
Manufacturing is expected to continue driving growth in the private sector, led by strong domestic consumption and nonoil exports, supported by continued capital investments in the sector. Gross (real) fixed capital formation expanded at a CAGR of 17.0 percent over the last 10 years until 2012, while strong point of sale transaction data indicate ongoing demand for manufactured goods. Sales through point of sale transactions increased at a CAGR of 25.4 percent during 2007-2012. Meanwhile, nonoil exports have doubled since 2007 to $ 49.5 billion in 2012.
Construction, which rose 10.3 percent, was among the fastest growing private sectors in 2012, led by record contract awards. As the largest projects market in the Middle East, Saudi Arabia recorded contracts worth $ 50 billion in 2012, according to MEED estimates. Furthermore, MEED forecasts contracts awarded to increase to $ 70 billion in 2013.
Ongoing government spending on transport and social services is expected to keep the services sector vibrant. Under the Ninth Development Plan, the government intends to invest $ 30.0 billion in the transport and communications sector, and $ 74.0 billion in social and health services.
Trade surplus expanded to 35 percent of GDP in 2012 from 29 percent in 2010, with oil exports increasing to 48 percent of GDP from 41 percent over the same period. Oil exports, as a percentage of total exports, surged to 88 percent in 2012 from 86 percent in 2010, with crude oil accounting for almost 90 percent of oil exports and refined products accounting for the rest.
Current account balance is expected to remain positive, primarily due to high trade surplus that will continue to offset deficits in services and current transfers. Investment income from abroad, although sustained throughout the global economic slowdown, is believed to deliver better returns as interest rates are anticipated to rise after 2015. Consequently, current account balance is estimated to plunge to 12.4 percent of GDP in 2017 from 26.5 percent in 2012.
Improvement in the overall business climate is expected to increase foreign direct (net) inflows into the Kingdom, while portfolio investments abroad are likely to decline gradually. Foreign direct investment is expected to increase at a CAGR of 3.1 percent to $ 16.1 billion in 2017, while portfolio investments abroad are likely to decelerate at a CAGR of 10.6 percent to $ 10.4 billion. Other investments abroad are estimated to rise at a CAGR of 15.0 percent to $ 17.3 billion in 2017.
Population growth in Saudi Arabia is estimated to decelerate significantly in the coming decades following rapid growth in the last decade (2000-2010). Population growth is estimated to slow down to a CAGR of 2.0 percent between 2010 and 2020 and a CAGR of 1.4 percent during 2020-2030 vis-a-vis a CAGR of 3.2 percent in the previous decade (2000-2010). Following a backlash against the inflow of immigrants, net migration is expected to slowdown, as Saudization reduces demand for foreign workers. Non-Saudi population, which grew to a third of total population in 2012, is estimated to plunge by as much as 10 percentage points to 23 percent of total population by 2024.
The high rate of unemployment among Saudi nationals has prompted a backlash against companies hiring foreign laborers. The government hopes to strengthen its Saudization initiative, which includes fines ($ 640 a year for each additional expat) for companies with work force comprising less than 50 percent Saudi nationals, as a way to combat the persistent unemployment issue. Saudi Arabia aims to create 3 million jobs for nationals by 2015 and 6 million jobs by 2030, partly through the Saudization initiative. Moreover, the government has stepped up unemployment benefits through the Hafiz program introduced in late 2011.Through the program, unemployed Saudis are given SR 2,000 ($ 533) a month for up to a year to assuage discontent regarding the issue.
In 2013, fiscal spending would be almost 19.0 percent higher than the 2012 budget, but 4 percent lower than the actual spending. Education, health care, and transport and infrastructure received higher budgetary allocations. The new budget’s objectives are in line with the Ninth Development Plan (2010-2014), which has allocated more than 50 percent of $ 390.0 billion for human resources development to transform productivity of the Kingdom’s labor force, address youth unemployment and reduce reliance on the expatriate population.
In addition, the government intends to strengthen health care infrastructure by increasing the number of beds to over 100,000 by 2014 and hospital staff, among other initiatives. The impact of all these measures is likely to raise breakeven oil price by 14.5 percent to $ 85.2 in 2013.
Inflationary pressures, as measured by the cost of living index, continued to ease in 2012, led by softening prices of food items, rent, health care, and other expenses and services. Average inflation (end-of-the-year prices) in Saudi Arabia slowed to 4.6 percent in 2012, down from 5.0 percent in 2011 and 5.3 percent in 2010. The decline was particularly pronounced in the other expenses category, which regressed to 3.7 percent in 2012 from 9.0 percent in 2011. The index rose in late 2011, reflecting fast-rising gold and jewelry prices (which make up bulk of the category). However, the rate of increase in the category slowed in 2012, as gold prices stabilized.