JEDDAH, 12 November 2003 — Suffering little or no impact from the Iraq war, the Saudi economy experienced a strong year in 2003 and the trend is likely to continue in 2004, a leading bank said yesterday.

Brad Bourland, chief economist of Saudi American Bank (SAMBA), said in a report on the economy: “2003 has turned out to be an exceptional year for the Saudi economy. Oil revenues will be at a 20-year high with a SAMBA-estimated $85 billion for the country.”

In 2004, gross domestic product will grow by an estimated 6.8 percent on the back of higher oil revenues, with a budget deficit of one percent of GDP and debt expected to account for 86 percent of GDP, the report predicted. Fiscal performance in the current year should be strong, said Bourland, with an expected budget surplus, a decline in government public debt and an increase in foreign reserves.

Although oil prices are expected to hover between $24 and $28 a barrel in 2004, oil revenues, which will remain adequate, are likely to decline from their current levels.

Inflation is estimated to remain at a low one percent next year and interest rates, which are already low and tied to the interest rates in the United States, would only increase should there be a shift in the American economy. The bank also forecasts for 2004 a current account surplus for the sixth consecutive year at $7.5 billion.

SAMBA said what it would like to see in Saudi Arabia “is the growing importance of the traditional private-sector business cycle and its impacts,” adding that the non-oil sector was the answer to creating jobs.

Meanwhile, Prince Abdullah ibn Faisal ibn Turki, chairman of the Saudi Arabian General Investment Authority or SAGIA, said the climate of terror will have little impact on foreign investment in the Kingdom.

“Anything that threatens the safety and security of a people in a country is not a positive thing for investment and economic activity. It frightens people off,” he said. “But people and large companies understand the situation very well and realize this is not going to be destructive to many things,” he said.

Prince Abdullah urged government departments to eliminate red tape and make way for privatization and reform.

“We have a problem in seeing a pattern in the licensing of foreign investors because most of the sectors like public services, utilities and others where larger investments would come have not really opened up,” the prince said.