SAUDI Arabia can expect a reasonable economic performance in 2012 as its non-oil sector grows and inflation eases, according to a report by Jadwa Investment.

Lower oil production will cause total real economic growth to slow, and combined with lower oil prices, will reduce the budget and current account surpluses, the report says.

High government spending will remain the engine of the non-oil economy and Jadwa predicts economic growth to fall to 3.1 per cent in 2012 from 6.8 per cent in 2011.

Construction, the main beneficiary of government spending, should be the fastest growing sector, according to the report.

“There has been little progress in the government’s plan to build 500,000 new housing units, announced in March 2011,” the report said. “Growth in cement sales and imports of construction materials in 2011 was in line with historical trends. This is probably because of the time it is taking to build momentum at the new housing ministry and because the initial work would involve sourcing the land and designing the properties and infrastructure. In 2012 there should be much more construction activity.”