Oil price and interest rates main headwinds for Saudi economy

The uncertain outlook for oil prices and a probable rise in interest rates are the main headwinds facing the Saudi economy in 2010.

Last year there was almost no growth in the Saudi economy, according to a new report from Banque Saudi Fransi. The slowdown resulted in a surge in unemployment from 6.2 to 15.2 per cent.

Bad debts from the collapse of the Algosaibi group helped to depress bank lending during the year. Growth in bank lending crashed from an unsustainable 27 per cent in 2008 to just 2.1 per cent in 2009, said Banque Saudi Fransi. Similar rates of bank lending in China in 2009 have led to question marks about the sustainability of economic expansion there.