Per Abdulaziz Z. Mahasen, managing Partner at Optimead, a Rijadh-based consultancy:

Saudi Arabia, the Arab world’s largest economy, is in no rush to raise interest rates and will keep plowing its oil revenue into kick-starting growth.  The kingdom, the world’s largest oil exporter, last year announced that it would spend $400 billion on infrastructure over a five-year period to bolster the economy, the largest stimulus package in the [G20].  The country is allocating almost $70 billion to investments this year, a 16% increase on 2009.  Rising oil prices, which have rebounded to about $75 a barrel from less than $35 in February, are also likely to boost growth in 2010].”

The view echoes that of those observers wh0 foresee static rates during the year across the region’s dollar-pegged Gulf economies–Saudi Arabia, UAE, Bahrain, Qatar and Oman–given that historically their tightening has coincided roughly with the Fed’s.  Aside from that, however, central bank Governor Muhammad al-Jasser noted to Bloomberg that low inflation and tepid loan demands are not condusive to a rate hike.  Credit may begin to flow by the spring or summer, however, as domestic banks especially should have a better handle by then on the increase of NPLs forecasted in November.

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