April 10, 2007	Tuesday	Rabi-ul-Awwal 21, 1428

RIYADH, April 9: Saudi Arabia’s current account surplus is expected to reach SR245 billion ($65.3bn) or 19.2 per cent of the gross domestic product (GDP) this year, the Saudi bank SABB noted in its latest report on the health of Saudi economy.

Remittances leave a major impact on the kingdom’s balance of payments. “We estimate that this year SR58.1 billion will be remitted abroad compared to SR52.4 billion remitted in 2005,” SABB chief economist Dr John Sfakianakis told the local press, adding around 65pc to 70pc goes to South Asia and the Philippines.

“After the US, Saudi Arabia is the second-biggest source of workers’ remittances to developing countries,” he said.

Saudi Arabia’s current account surplus was 10 per cent of the world’s surplus in 2006 and was among the top five global surplus holders.

However, the current account surplus was projected by the bank to decline 46.1pc due to decrease in oil exports, increase in imports and service and income transfer deficits.

According to Saudi Arabian Monetary Agency (SAMA) preliminary data, Saudi Arabia’s trade balance is estimated to record a surplus of SR553.4 billion ($148 billion) in 2006, an increase of 17.5 per cent.

The current account is estimated to record the highest surplus in the country’s history, amounting to SR358 billion ($95.5 billion) in 2006 compared to SR337.7 billion ($90.05 billion) in 2005, an increase of 6 per cent.

The SABB report said that a drop in the current account would release some of the upward pressure on the currency. The US remained Saudi Arabia’s top supplier with 14.8pc of imports, followed by Japan and Germany. China, in fourth place, increased its share of the total to 7.4 per cent from 6.6 per cent in 2004. US imports grew by 60 per cent between 2003 and 2005 whereas Chinese imports rose by 104 per cent over the same period.

“The growth in Chinese products is not a surprise, however, as we estimate that around 11pc of the products exported from China into Saudi Arabia are from US-owned firms based in mainland China,” Sfakianakis added.