RIYADH, Sept 23: Saudi Arabia’s gross domestic product (GDP) grew by 3.4 per cent in 2007 while riding on unprecedented cash flow due to strong crude markets, its budget surplus reached 12.3 per cent of GDP, the 44th annual report of the Saudi Arabian Monetary Agency (SAMA) said.

Presenting the report to King Abdullah during a ceremony on Monday at Al-Safa Palace in Makkah, SAMA Governor Hamad Al-Sayari said the kingdom’s private and public sectors grew by 5.8 per cent and 2.7 per cent in 2007, respectively.

The general financial situation improved considerably with the kingdom having budget surplus for the fifth consecutive year. The balance of payments also recorded surplus for the ninth consecutive year, reaching 24.9 per cent of GDP.

As a result of the reforms, carried out by the Saudi government, the report added that the private sector had an average growth rate of 5 per cent during the past years with non-oil exports growing 23.1 per cent annually, amounting to 7.3 per cent of GDP by the end of 2007.”

However, accompanied with growth, inflation has also been rising, all these years. It went up by 4.1 per cent in 2007, then to 11.1 per cent in July 2008 before it decreased to 10.9 per cent in August 2008.

Conservative policies and precautionary measures adopted by SAMA helped guarantee a strong and stable local financial system protecting it from the fallout of the loss in other economies around the world, the SAMA report emphasised.