While the West finds little luck in government intervention, the kingdom is booming on high oil prices and tremendous cash injections from Riyadh into the nation's economy. With 7 per cent GDP growth last year, the question becomes: how long can it last?
Saudis enjoy economic miracle
Vast injections of economic stimulus and quantitative easing have so far failed to pull the US, European and Asian economies back to full-throttle growth.
But in one country, government intervention in the economic and financial system has had a dramatic, positive effect.
Saudi Arabia's economy is expanding on all fronts, it seems, as the huge US$130 billion (Dh477.5bn) stimulus package announced early last year flows through to the real economy. The nation is booming.
Even the IMF, which has been doom-laden on most aspects of the world situation, is glowing in its assessment of Saudi Arabia. "The outlook is buoyant and will give a fillip to the region and advance the country's social agenda," it said in its latest annual report on the kingdom.
Several factors have come together to cause the Saudi boom - historically high oil prices have coincided with big government spending on some huge infrastructure, social and employment projects.
The kingdom's banks, which, thanks mainly to high levels of pre-crisis capitalisation have also weathered the storm better than most of the world, and are helping to finance the growth through commercial and consumer lending.
This combination of benign economic conditions produced GDP growth of more than 7 per cent last year, right up there with the fastest-growing economies in the world. Growth in government spending reached 24 per cent last year, the highest in a decade, with a final national budget of $214bn.
But there are experts who warn that the pace of growth cannot be maintained indefinitely, and they point to the dangers of an inflationary credit-fuelled bubble. Still, they are being drowned out by the applause for the Saudi economic miracle.
"The internal Saudi economy is intrinsically stable and could sustain a depressed period of commodity prices for some time, even if crude reached doomsday levels," Jamal Al Kishi, the managing director of Deutsche Securities, which is part of the Deutsche Bank's investment bank operation in the kingdom, said in Dubai last week.
Certainly consumers are in vibrant mood. The Deutsche Securities analysis pointed to record levels of cash withdrawals from cash machines in the kingdom.
During the summer, including the Holy Month of Ramadan, 54bn Saudi riyals (Dh52.88bn) were withdrawn each month, on average, with an additional 10.4bn riyals spent electronically at the tills in the kingdom's malls and shops.
That puts the nation in the top ranks of global spending, but it is probably an understatement of the real extent of the consumer spree: only about half of Saudi households use banks, says the Deutsche Bank analyst Marc Hammoud.
Underpinning consumer confidence are the government measures announced last year: unemployment-benefit schemes, a minimum wage of 3,000 riyals per month, a 15 per cent pay rise for government employees, better health care and housing, all topped off by a two-month salary bonus for public employees that was matched by most companies in the private sector.
This expansion in spending power was accelerated by the policies of Saudi Arabia's banks. While the financial crisis forced banks elsewhere in the GCC into a credit freeze, lenders in the kingdom - still the most profitable in the region - are not reluctant to spread the good fortune around.
Bank loan growth has taken off since the beginning of the year with growth rates approaching 16 per cent, driven by the retail segment. Retail loans increased about 25 per cent in the first quarter and lending to consumers has grown faster than lending to corporations, according to estimates from Deutsche Bank based on statistics from the nation's central bank.
Even with this sharp increase in bank lending and consumer spending, inflation levels are under control, says Deutsche Bank, with a headline figure of about 4 per cent for August.
"In any case, the government stated that fiscal and monetary policies could be used proactively to contain any inflationary pressures should they materialise. The authorities could use subsidies and other price control measures if inflation increases too fast or becomes too high," says Mr Hammoud.
However, there are some potential dark clouds on this generally bright economic horizon.
The first, inevitably, is the oil price. A fall in global crude prices from historic highs might not be deadly for the Saudi economy, but it would certainly affect the arithmetic of government spending.
The kingdom believes the current high prices are unsustainable in the long run and the oil authorities have been trying to reduce the price to about $100 per barrel all year, with limited effect - Brent crude currently sits at about $114 per barrel. Some analysts believe it will fall sharply later this year or early next year.
Secondly, there is the non-oil sector of the country that has seen significant growth but which some analysts believe could be slowing.
"The performance of the non-oil sector looks set to slow sharply in the second half of 2012," says Said Hirsh, the Middle East economist with the consultancy Capital Economics in London, largely because of lower government spending.
After last year's heroics, most experts are predicting slower growth rates for the nation this year: the IMF is at the top of the range forecasting 6 per cent; Deutsche comes in at 5.4 per cent; Capital Economics predicts 4.5 per cent. These are still healthy growth levels, which the US and Europesurely envy.
As ever in the region, there are also external forces that may affect the Saudi economy. "Saudi's resilience was tested by the events in Egypt, Yemen and Bahrain and found to be strong," says Mr Al Kishi. "But Syria is a cause for concern. What's happening there could spread to other parts of the region."
And as most Saudi crude goes to Asia rather than the West, any significant slowdown in the East would be worrying for the kingdom.
But Mr Al Kishi believes there has been a qualitative change in the Saudi economy that can overcome these dangers.
"There has been an intrinsic and structural change brought about by the government and the private sector. There's no reason to believe it will slow down."