Saudi oil forecast to earn $4tr in 10 years 

(MENAFN - Arab News) At the current forecasts of $85 per barrel in 2011 and increasing the oil price by $5 per year over the next 10 years and conservatively assuming a constant production of 10 million barrels a day, the Saudi economy will generate revenues of $4 trillion, according to a report released by Deutsche Bank yesterday. "We expect the Saudi economy to enjoy a V shape recovery and return to trend growth of 4-5 percent during the coming years due to five strong economic indicators," said the report authored by Pascal Moura, head of research at the bank.

The report, titled 'Accessing Wealth Transfer: Equity Basket,' comprehensively discusses each and every aspect of the economy.

"Saudi Arabia is the world's leading petroleum exporter and holds more than 20 percent of the word's proven petroleum reserves as well as significant gas reserves. This unique access to natural resources puts the country in an ideal position to dominate several industries and channel considerable oil revenues into infrastructure investment, boosting the non-oil private sector. Using our DB oil price forecasts of $85 in 2011, we estimate the oil price increase will generate an additional $60billion in revenues in 2011. The country demographics are unique with the population growing by about 3 percent per annum and 70 percent of the population below 30 years of age. We expect the economy to enjoy a V shape recovery and return rapidly to a trend growth of 4-5 percent per annum, well ahead of the developed world," the report said.

"In recent years the authorities have continued to diversify away from the hydrocarbon industry, strengthening the financial sector and implementing structural reforms to boost private-sector-led growth.

"The strong oil price over the next 5-10 years should allow the government to continue its diversification efforts and promote the non-oil economy. Industries such as power generation, telecommunications, natural gas and petrochemicals are all likely to benefit during the coming years, which should also help to increase employment opportunities.

By Mahmood Rafique