Saudi Arabia's GDP to grow by 5.1 pc in 2012

DUBAI: Saudi Arabia's economy is expected to grow by 5.1 per cent in 2012 despite the unpredictable economic situation in advanced countries, a new report has revealed.

"As a result of a wide variety of trading partners to which Saudi Arabia exports its products, it will have a foreign currency reserve valuing 2 trillion Saudi riyals," the report said, adding that the gross domestic product (GDP) will grow by 5.1 per cent in 2012.

On the credit situation of banks, the Riyad Capital report said: "Bank budgets have improved considerably after the passage of six quarters from the period for getting rid of high-risk assets."

According to the report, the fall in interest rates caused some problems to the banking sector in general.

However, the banks tried to increase their revenue by revising their lending portfolios, the report pointed out.

Riyad Capital said an increase in personal banking would help banks achieve a balance between risks and revenues.

However, a fall in the issuance of government bonds poses a challenge to the country's banking system, it said.

"The European debt crisis will limit investment options and force banks to follow a conservative policy... followed in the past," it added.