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Political unrest is likely to affect tourism growth potential. It may also have animportant impact on tourism ows to countries such as Libya, Algeria, Bahrain andYemen, where substantial investment has been made in tourism infrastructure overthe last ve years. Tourism development in these countries is now considered to bepostponed for an indenite time. However, the impact is likely to be limited andshort-lived. The Middle East was the fastest growing region in 2010, recording anestimated (14.1%) rise in international tourist arrivals to 60.3 million in contrastto a (-4.3%) dec line in 2009, according to the UNWTO. International tourist arriv-als to North Africa in the rst two months of 2011 are expected to have declinedby (-9.4%); while the Middle East region saw arrivals declined by (-9.8%).

According to Global advisor, A Global advisory-April 2011 G@19, SaudiArabia maintained its top spot of the 24 countries surveyed with (85%) rating theirnational economy as good, followed by India (73%), Sweden (71%), Australia (70%),China (67%) and Canada (64%).

The number of travel agencies and tour operators (including time share) in theKingdom stood at 960 in 2010, out of which 789 were licensed travel agencies and171 tour operators. The number of tourism festivals and events held in the Kingdomstood at 32 in 2010 compared to 12 in 2007. There were 189 museums in theKingdom in 2010, where 132 were private museums, 21 each were antiquities mu -

seums and specialist museums; while the rest 15 museums were related to scientic,educational and military.Tourist establishments in the Kingdom are estimated to have grown from

29,206 in 2004 to 44,148 in 2010 (a growth of over 51% in six years). The numberof tourists overnight trips in Mar 2011 were: inbound 1.67 million (154% yearlyincrease), domestic 1.55 million (9.7% yearly increase) and outbound 1.08 million(-20% monthly decrease). The size of the Kingdoms tourism industry was estimatedat SR 56.97 billion ($15.19 billion) in 2010, which is expected to surge appreciablyin the future years.

Tourism plays a pivotal role in the Kingdoms economy, contributing (3.6%)to total Gross Domestic Product (GDP), (7.5%) to Non-Oil GDP and (12.3%) toPrivate sectors GDP in 2010. Tourism value-added of the Kingdom was estimatedat (SR58.9 billion) in 2010, recording an increase of (6.9%) in one year. The value-added contribution made by transport and food services sectors was almost 35%each; while by accommodation sector it was (22.9%). Tourism direct employmentwas estimated at 492 thousand in 2010, which accounted for (6.1%) of the totalKingdoms employment and (6.9%) of the Kingdoms private sector employment.

Tourism employment growth has outperformed total Kingdoms employment growthduring 2005 2010 and this trend is likely to continue in the future.

International Tourist arrivals grew by around (4.7%) yearly during the rst twomonths of 2011, consolidating the rebound registered in 2010. Growth was positivein all world sub-regions in Jan and Feb 2011 with the exception of the Middle Eastand North Africa region. South America and Asia led growth (both at 15%), followedby Sub-Saharan Africa (13%) and Central and Eastern Europe (12%).

Worldwide, international tourist arrivals reached 940 million in 2010, recordingan increase of (6.6%), primarily driven by emerging economies on the back of im-proved condence and economic conditions worldwide. UNWTO predicts a growthin international tourist arrivals in the range of (4%) to (5%) in 2011.

In continuation of the MAS Centers (SCTA) estimation of Transport and TourismPrice Index (TTPI) for Saud Arabia, in this report the TTPI has been calculated forMar 2008, Mar 2009, Mar 2010 and Mar 2011. The internal tourists experiencedan annual TTPI ination rate of (6%) in Mar 2011 compared to (-1.1%) experi-enced in Mar 2010. Furnished apartment rent ination (annual) was the highest at(34.4%) in Mar 2011.

page (2)

Summary June 2011

page (10)

page (12)

page (15)

Saudi Tourism OutlookA monthly electronic publication

MIDDLE EAST TOURISM

GLOBAL TOURISM

TOURISM AND TRANSPORT PRICE INDEX (TTPI)

Contents Page

Summary

Saudi Tourism 2Tourism Establishments in KSA

Size of the IndustryTourism Value - Added

Contribution to the Economy

Tourist Trips 3Inbound, Domestic & OutboundTourist Nights 4Inbound, Domestic & OutboundTourist Expenditures 5Inbound, Domestic & OutboundTourism Balance of Payments

Accommodation Sector 5Hotels & Furnished ApartmentsSaudi Economic Environment 7

GCC & Middle East Tourism 10Intl Tourist Arrivals

Intl Tourist Receipts

M.E-Economic-Environment

GCC-Economic-Environment

Global Tourism 12

Intl Tourist ArrivalsWorld-Economic-Environment

Tourism and Transport PriceIndex (TTPI) 15

SAUDI TOURISM

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Saudi Tourism OutlookJune 2011

2www.mas.gov.sa

Chart (3): Tourism Value added by sectors (SRB) (2004-2010)

Chart (1): Growth of Tourist Establishments in the Kingdom

Chart (2): Annual Expenditures by Internal Tourists (SR Billion)

SAUDI TOURISM

0

10000

20000

30000

40000

50000

20052004 2006 2007 2 008 2009 2010

0

20

40

60

80

SRB

illion

Inbound Dom estic

20052004 2006 2007 2008 2009 2010

Tourism Establishments in the Kingdom

Tourist establishments in the Kingdom are estimated to

have grown from 29,206 in 2004 to 44,148 in 2010 (over

51% increase in six years), Chart (1). Among the touristestablishments, six types of establishments represented

(98.6%) of total, where tourist restaurants accounted

for the major share at (64.4%); the recreation places

(17.1%); furnished apartment units (10%); hotels (2.6%);

transport companies (2.4%); travel agencies (2.2%); and

others (1.4%).

Size of the Saudi Tourism Industry

The size of the Saudi tourism industry can be measured

from the demand side by the amount of expenditures

made within the Kingdom by the internal tourists (in-

bound plus domestic tourists). Its size was estimated at

SR 56.97 billion ($15.19 billion) in 2010, as the domestic

and inbound tourists spent SR 31.33 billion ($8.35 billion)

and SR25.64 billion ($6.84 billion), respectively, Chart

(2). The Saudi tourism industry aims to raise the level of

tourist expenditure through qualitative improvements to

the product portfolio as well as by diversifying the range

of tourism products and services. The size of the industry

is expected to swell appreciably in the medium-term.

Tourism Value-Added

The value-added of the Kingdoms tourism sector was es-

timated at SR58.9 billion ($15.7 billion) in 2010, recording

an increase of (6.9%) in one year. Regarding its composi-

tion, just three sectors accounted for almost (93%) of the

total tourism value-added in 2010, where transport ser-

vices and food services sectors constituted (35%) each,

and accommodation sector (22.9%); while recreation,

and travel agencies services corresponded to (5.1%) and

(2.2%), respectively, Chart (3).

Tourism Contribution to the Saudi Economy

Tourism plays a pivotal role in the Kingdoms economy.

It has proven contribution to economic growth, job-

creation, income generation, foreign exchange earn-

ings making a positive contribution to the balance of

payments, economic diversication, regional develop-

ment, infrastructure improvement, and poverty allevia-

tion. Estimates reveal that it contributed (3.6%) to total

Gross Domestic Product (GDP), almost (7.5%) to Non-

Oil GDP and (12.3%) to Private sectors GDP in 2010.

These contributions are likely to grow appreciably in the

Accommodation

Years

Transport Food Recreation Travel Agencies

20052004

0

5

10SRB

15

20

25

2006 2007 2008 2009 2010

Introduction

Saudi tourism is so diverse that it is not always properly

understood. Crucially, it includes visits for religious pur-

poses, and, what is often ignored, tourism also means

people travelling within Saudi Arabia for business, meet-

ings, conferences and exhibitions. It also includes travel

for social reasons such as visiting friends and relatives

(VFR), or for educational, sports, and health reasons.

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Chart (4b): Annual Indices of Tourism Employmentvs. Total Employment (2005=100)

Chart (4a): Annual Indices of Tourism GDP, Private GDP, Non-OilGDP and Total GDP (2004=100)

20052004

0

50

100

Indices

150

200

2006

Tourism.GDP Total.GDP Private.GDPN.Oil GDP

2007 2008 2009 2010e

Tourism. Emp Total . Emp

20050

50

100

Indices

150

200

2006 2007 2008 2009 2010e

Domestic Tourists

Domestic tourism has been and will remain the prima-

ry focus of tourism development policy in the Kingdom.

Four to ve provinces absorb the vast majority of domes-

tic trips. Domestic tourism market has traditionally been

seasonal, determined by school and religious holidays.

Domestic tourists made 1.55 million overnight trips in Mar

2011 to various parts of the Kingdom, reecting an in-

crease of (9.7%) compared to Mar 2010. YTD (Jan-Mar

Inbound Tourists

International tourists made 1.67 million overnight trips

to Saudi Arabia in Mar 2011, reecting a sharp increase

of (154%) compared to the same month of the previousyear, Chart (5). Year-to-Date, (Jan Mar 2011), tourists

(overnight visitors) made 3.29 million trips, which were

(64.9%) higher than the same period last year.

Religious trips accounted for (40.9%) of the total

trips; VFR (24.1%); Business trips (17.5%); Other trips

(16.2%); and Leisure, Holidays - Vacation LHV (1.2%).(44.9%) of the inbound tourists stayed in hotels/re-

sorts; (24.8%) in private accommodation; (23.2%) in fur-

nished apartments; and (7.1%) in other accommodation.

(77.9%) of the tourists came by air; while (22.1%)

came by road.

The highest proportion of international tourists came

from the GCC countries, representing (30.2%); followed

by South Asia (29.5%); Other Middle East (18.6%), East

Asia/Pacic (9.4%); Africa (9%); Europe (2.9%); and

Americas (0.4%).(94.5%) of the tourists visited Kingdoms four prov-

inces out of 13 provinces, where (34.5%) visited Makkah;

(33.3%) Eastern Province; (15.7%) Riyadh; and (11.1%)

visited Madinah.

(Please note that the outbound monthly tourism data has

been revised from Jan 2011 onward by using new meth-

odology as per UNWTO recommendations. The new

methodology is based on validating the adjusted Minis-try of Interior (MOI) gures that we receive each month

from the Ministry using weighting rates from the monthly

household survey for domestic and outbound tourism

Chart (5): Monthly Overnight Tourist Trips in Mar (Thousand)

upcoming years. Chart (4a) shows indices of Tourism

GDP, Total GDP, Non-Oil GDP and Private Sectors GDP

of the Saudi economy, highlighting the fact that tourism

has consistently been a positive contributor to the Saudi

economy. Tourism direct employment was estimated at

492 thousand in 2010, which represented (6.1%) of the

total Kingdoms employment and (6.9%) of the private

sector employment. Chart (4b) reveals that in general,

the tourism employment growth has outperformed total

Kingdoms employment growth during 2005 2010, as

direct tourism employment grew at an average annual

rate of (8.2%) compared to (5.6%) and (5.8%) average

yearly growth rates recorded for the overall Kingdom and

the private sector of Saudi Arabia, respectively. This trend

is likely to continue in the future (According to the tour-

ism employment numbers estimated by the MAS Center,

SCTA).

Tourism Trips Mar 2011

(DOTS). Therefore, currently, the comparable outbound

tourism data for Jan 2010 to Mar 2010 are not available.

Charts 5 to 8 exclude outbound tourists).

Inbound Domes tic

500

0

1000

1500

Tho

usand

2000

Mar.10 Mar.11

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2011), domestic tourists made 4.9 million trips compared

to 6.10 million trips in the same period last year, recording

a decline of (-19.7%), Chart (6).

Leisure trips accounted for the largest proportion,

(45.8%) of the total, the VFR (23.1%), Religious trips

(20%), Other trips (6%), and Business trips (5%).

(46.5%) of the tourists stayed in Furnished apart-

ments, (27.5%) in Private accommodation, (23%) in Ho-

tels/resorts and (3%) in Other accommodation.

(95.5%) of the tourists came by road, while (4.5%)

came by air.

(81%) of the tourists visited Kingdoms four provinces

out of 13 provinces, where (43.9%) of the total number

of tourists visited Makkah; (16.3%) Madinah; (10.5%) Ri-

yadh; and (10.3%) Eastern province.

Chart (6): Cumulative Overnight Tourist Trips DuringJan - Mar (Thousand)

Chart (6b): Tourist Nights (Million) During Jan-Mar 2011

Inbound Domestic

0

2000

4000

6000

Thousand

Jan-Mar (10) Jan-Mar (11)

Outbound Tourists

Tourists from Saudi Arabia made 1.079 million overnight

trips to other countries in Mar 2011, compared to 1.348

million in the previous month, recording a monthly decline

of (-20%). Year-to-date (Jan to Mar 2011), tourists made

3.749 million overnight trips.

(67.7%) of the total number of tourists went for Lei-

sure purpose; (24.9%) for VFR; (4.5%) for other purpos-

es including medical, education and training; and (2.9%)

went for business purposes.

(59.5%) of the tourists traveled by road and (40.5%)

by air.

The highest proportion of tourists, (40.8%) stayed

in hotels; (30.1%) stayed in private accommodation;

(27.6%) stayed in furnished apartments; while (1.5%)

stayed in other places.

The largest proportion of the tourists, (37.3%) visited

the other Middle East countries; (25%) GCC countries;

(24.4%) South Asian countries; while (13.3%) visited the

Rest of the World.

Inbound Tourists

International tourists stayed in the Kingdom 19.38 million

nights in Mar 2011, reecting a sharp increase of (154%)

over March 2010. Year-to-Date (Jan Mar 011), interna-

tional travelers stayed 50.28 million nights, which were

(124%) higher than the same period last year.

Domestic Tourists

Domestic tourists stayed 7.13 million nights in various

parts of the Kingdom in Mar 2011, which were (-16.9%)

lower than in Mar 2010. Year-to-Date (Jan-Mar 2011), do-

mestic tourists stayed 22.32 million nights compared to

32.3 million nights in the same period last year, recording

a decline of (-30.9%).

Outbound Tourists

Tourists from Saudi Arabia stayed 13.05 million nights in

other countries in Mar 2011 compared to 16.04 million in

Feb 2011, recording a monthly decline of (-18.6 %). Year-

to-Date (Jan-Mar 2011), the number of nights tourists

stayed outside the Kingdom stood at 45.23 million nights.

Tourist Nights Mar 2011

Inbound Domestic

0

0.5

1.5

2

2.5

1Million

Outbound

Jan Feb Mar

Chart (6a): Overnight Tourist Trips (Million) During Jan-Mar 2011

Inbound Domestic

0

5

15

20

25

10Million

Outbound

Jan Feb Mar

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Tourism Expenditure Mar 2011

Accommodation Sector

Inbound Tourists

International tourists spent (SR2,159) million on over-

night trips in Mar 2011, which were (92.3%) higher than

in Mar 2010. The largest amount was spent on accommo-

dation constituting (29.5%) of total, followed by shopping

(26.6%), transportation (19.3%), food/beverages (12.4%)and recreation (10.2%), Chart (7). Year-to-Date (Jan-Mar

2011), international tourists spent (SR5,349) million, re-

cording a (63.8%) increase in one year, Chart (8).

Domestic tourists

Domestic tourists spent (SR2,381) million in Mar 2011,

recording a yearly increase of (27.1%) compared to Mar2010. Domestic tourists spent (30%) of total on shop-

ping; (23.4%) on accommodation; (20.1%) on recreation;

(16.1%) on food and beverages; and (9.4%) on transpor-

tation. Year-to-date, domestic tourists spent (SR6,056)

million, recording an increase of (1.8%) in a year.

Tourism Balance (T.B.)

In 2010, the Kingdoms tourism balance account revealed

a surplus of (SR3,124) million compared to a lower sur-

plus of (SR725) million in 2009. A relatively higher surplus

in 2010 is attributable to increased number of incoming

pilgrims to the Kingdom and correspondingly resulting in

a higher spending by them.

Hotels Preliminary estimates for the year 2010

There were 1140 establishments with estimated ca-

pacity of 102,305 rooms in 2010.Average room occupancy rate for hotels in the King-

dom was (59.2%) and average bed occupancy rate was

(52.5%); while the average length of stay was (5.3 nights)

in 2010.

Madinah had the highest room occupancy rate of

(66.2%), followed by Northern Border (63.5%), Eastern

(63%), Riyadh (62.3%), Al Baha (60.8%), Makkah and

Hail (56.2%) each; while Tabuk had the lowest room oc-

cupancy rate of (44.2%).

Riyadh had the highest bed occupancy rate of (57.9%),

then Madinah (56.8%), Northern Border (56.7%), East-ern (56.5%), Hail (52.8%), Qassim (51.2%), Makkah

(50.3%); while Tabuk had the lowest bed occupancy rate

of (37.6%), Chart (9).

The diverse product availability and the extraordinarily

seasonal markets of Makkah and Madinah, and in recent

years Jeddah and Riyadh, have allowed the hotel indus-

try to develop in a very rapid yet efcient manner.

Outbound touristsOutbound tourists from Saudi Arabia to other coun-

tries spent (SR3,570) million in Mar 2011 compared to

(SR7,104) million in Feb 2011, recording a monthly de-

Chart (7): Monthly Tourism Expenditures byDifferent Tourists in Mar (SR Million)

Inbound Domes tic

0.00

500.00

1,000.00

1,500.00

2,000.00

3,000.00

2,500.00

SR

Million

Mar.10 Mar.11

Chart (8): Cumulative Tourism Expenditures by DifferentTourists During Jan - Mar (SR Million)

Chart (8a): Tourism Expenditures (SR Million)During Jan-Mar 2011

crease of (-49.7%). Year-to-date (Jan-Mar 2011), the

total expenditures made by outbound tourists stood at

(SR14,166) million. Regarding the structure of spending

of the outbound tourists in Mar 2011, the largest amount

was spent on shopping representing (28.6%) of the total,

followed by recreation (21%), accommodation (18.3%),

other items (17%), food (11.2%), and transport (3.9%).

Inbound Domestic

0

2000

4000

6000

8000

SRB

illion

Jan-Mar (10) Jan-Mar (11)

Inbound Domestic

0

2000

4000

6000

8000

SR

Million

Outbound

Jan Feb Mar

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Table 2: Hotels and Licensed Furnished Apartment Units 2010 According to Old vs. New Classication

Province

Hotels (No). Furnished Apartment Units

OldClassication NewClassication Unclassied OldClassication NewClassication Unclassied

Riyadh 90 52 38 852 207 645

Makkah 663 137 526 1521 307 1214

Madinah 196 72 124 565 11 554

Qaseem 9 5 4 99 41 58

Eastern Province 62 39 23 658 138 520

Assir 28 10 18 426 45 381

Tabouk 22 6 16 43 16 27

Hail 3 1 2 63 67 -4

Northern Province 18 3 15 5 7 -2

Jazan 11 3 8 34 47 -13Najran 17 6 11 62 54 8

Baha 8 2 6 62 30 32

Jouf 13 1 12 33 14 19

Total 1140 337 803 4423 982 3441

Chart 9: Distribution of Hotels 2010

Furnished Apartment Units Preliminary esti-

mates for the year 2010

There were 4423 establishments in 2010, with

101,536 apartments.

Average room occupancy rate was (54.2%) and aver-

age bed occupancy rate was (44.2%); while the average

length of stay was (5 nights) in 2010. Northern Borders

had the highest room occupancy rate of (67.8%), then

Riyadh and Al Jouf (63.9%) each, Qassim (62.6%), East-

ern (62.4%), Jizan (59.7%), Hail (58.8%), and Madinah

(51.8%); while Asir had the lowest room occupancy rate

of (45.4%).

Regarding bed occupancy rates by provinces, head-

ing the list was Northern Border at (60.5%), then Riyadh

(59.6%), Al Jouf (56.7%), Qassim (53.9%), Hail (53.6%),

Jizan (52.6%) and Eastern (52.2%); while Madinah had

the lowest bed occupancy rate of (39.9%), which ranked

second in terms of number of beds sold (23.8 million).

The highest number of furnished apartments units

were in Makkah province (1521), then Riyadh (852),

Eastern (658), Madinah (565), Asir (426), Qassim (99),

Hail (63), Najran and Al-Baha (62) each, Tabuk (43), Ji-

zan (34), Al-Jouf (33), and Northern Borders province (5),

Chart (10).

Chart 10: Distribution of Furnished Apartments Units 2010

Table 1: Most Popular Type of Accommodation by Purpose of Visit in 2010

Purpose of Visit Inbound Domestic Outbound

Religion Visitors Hotels Hotels

Business Visitors Hotels Furnished Apartments Hotel

Leisure Hotels Furnished Apartments Hotel

VFR Private Accommodation Private Accommodation Private Accommodation

Shopping Furnished Apartments Furnished Apartments

Others Others Furnished Apartments Hotels

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Tourism Festivals and Events in the Kingdom

Description 2007 2008 2009 2010 AAGR (%) 2007-2010

No. of tourism festivals 12 21 27 32 38.7

No. of visitors (Mil) 6.01 19.77 13.38 9.9 18.1

Exp. of visitors (SRB) 4.58 17.68 6.79 7.71 19.0

Exp per night Ave. (SR) 209 268 268 305 13.4

Tourism Festivals and Events in the Kingdom

The number of tourism festivals and events held in the Kingdom stood at 32 in 2010 compared to 12 in 2007, record-

ing an average annual increase of (38.7%). The number of visitors grew at an average yearly rate of (18.1%) during

the same period to 9.9 million in 2010. The annual expenditures incurred by such visitors were SR7.71 billion in 2010

compared to SR4.58 billion in 2007, representing an average annual increase of (19%). Average expenditures per

night were SR305 in 2010 compared to SR209 in 2007, recording an average yearly increase of (13.4%).

Licensed Travel Agencies and Tour Operators in

the Kingdom

The number of travel agencies and tour operators (in-

cluding time share) in the Kingdom stood at 960 in 2010,

out of which 789 were licensed travel agencies and 171

tour operators. Just four provinces out of 13 accounted

for (85%) of the total, where Riyadh province represented

the highest proportion with (35%), then Makkah (28.2%),

Eastern (17.2%) and Madinah province with (4.5%). Be-

sides above-mentioned agencies, there were 52 Umra

approved travel agencies and 136 tourist guides in the

Kingdom in 2010.

Museums in the Kingdom

There were 189 museums in the Kingdom in 2010,

where 132 were private museums, 21 each were antiqui-

ties museums and specialist museums; while the rest 15

museums were related to scientic, educational and mili-

tary. The largest number of museums were concentrated

in Asir province numbered 33 (including 32 private and

one antiquities museum), then Riyadh 31 (covering 9 pri-

vate, 8 specialist, 5 each from antiquities and scientic,

and 2 each from educational and military museums),

Makkah 25 (including 16 private, 3 each from antiquities

and specialist, 2 educational and one scientic museum),

Eastern 21 (including 16 private, 2 each from antiquities

and specialist, and one scientic museum), Tabuk 16

(comprising 8 specialist, 6 private and 2 antiquities mu-

seums), Qaseem and Hail 15 each dominated by private

museums, and Madinah 13 (including 11 private and one

each from antiquities and scientic museums); while the

rest of the ve provinces had 20 museums dominated by

private museums.

The Saudi Economic EnvironmentAccording to Global advisor, A Global advisory-April

2011 G@19 (a monthly Economic Plus report), Saudi

Arabia maintained its top spot of the 24 countries sur-

veyed with (85%) rating their national economy as good,

followed by India (73%), Sweden (71%), Australia (70%),

China (67%) and Canada (64%).

Saudi Economic Resolutions

The following resolutions were passed by the Council ofMinisters during the rst quarter of 2011.

Approval of the Saudi Institute of Internal Auditors

charter (28/2/2011).

Approval of the regulation of Real-Estate ownership

by GCC citizens in GCC states for residential and invest-

ment purpose (7/3/2011).

Approval of the regulatory arrangement of bottled

water and ice factories, provided that Saudi Food and

Drug Authority shall undertake all regulatory, executiveand supervisory tasks, issue technical licenses for these

factories, set up and monitor standard specications of

drinking water, set up sound bases for food and drug

manufacturing as well as health requirements that must

be met in water utilities (14/3/2011).

A Royal order was issued on 18/3/2011 which in-

cludes:

Disbursement of a two-month salary to all government

civil and military personnel.

Disbursement of SR 2000 per month to job-seekers at

the public and private sectors.

Setting the minimum limit of salaries of all categories

of Saudi workers at SR 3000 per month.

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Approval of building 500,000 residential units in all re-

gions of the Kingdom and appropriating a total amount

of SR 250 billion for this project which will be imple-

mented under the supervision of the General Housing

Authority.

Raising the amount of the maximum limit of the loan

granted by Real Estate Development Fund from SR

300,000 to SR 500,000.Establishing the National Anti-Corruption Authority.

Supporting the Ministry of Health with SR 16 billion for

the expansion of several hospitals and health centers.

Raising the maximum limit of the private hospitals -

nancing program run by the Ministry of Finance from

SR 50 million to SR 200 million.

Creating 60,000 military jobs for the Ministry of Inte-

rior.

Establishing a branch for the General Presidency of

Scholarly Research and Ifta in all regions of the King-

dom, creating 300 job opportunities for this purpose

and allocating SR 200 million to cover the branches

needs.

Establishing a complex called Saudi Fiqh (jurispru-

dence) Complex that will be a scholarly forum where

jurisprudent issues can be discussed under the super-

vision of the Council of Senior Scholars.

Allocating SR 500 million for renovating mosques

throughout the Kingdom.

Allocating SR 200 million for supporting the Holy

Quran Memorization Associations in the Kingdom, un-

der the supervision of the Ministry of Islamic Affairs.

Allocating SR 300 million for supporting the ofces of

Call and Guidance of the Ministry of Islamic Affairs,

Endowments, Dawa and Guidance.

Supporting the General Presidency for the Promotion

of Virtue and Prevention of Vice with SR 200 million to

complete the construction of its premises in different

regions of the Kingdom.Creating 500 jobs for the Ministry of Commerce and

Industry to support its control efforts, and hasten ap-

plication of deterrent penalties on price manipulators

and slander them, whoever the offender.

Raising the proportion of Saudization in the private

sector to create job opportunities for Saudi citizens.

The Minister of Commerce and Industry and the Min-

ister of Labor are to meet with businessmen to em-

phasize the determination of the State to effectively

accelerate the Saudization of jobs. The Labor Ministryis to report quarterly on rates of Saudization achieved

and the action taken by the Ministry in creating job op-

portunities for nationals in the private sector.

The fundamentals of the Saudi economy are strong and

the economy is in the best shape since 2009.

Currently, all indicators are positive, except ination.

Ination is likely to remain a concern driven by higher oil

prices and global commodity price pressures.

The impact of regional tensions is expected to be

small and short-lived. In addition, it is believed that re-

gional tensions are also stabilizing and this will have fur-ther positive impact on the Saudi economy.

The new government programs announced by the

King (as mentioned above) will add signicantly to the

Kingdoms growth momentum.

Government policies to build new housing will help

mitigate one of the chief causes of ination in the King-

dom (rent ination).

The latest economic indicators show that the Saudi

economy is on track for a solid economic growth perfor-mance for the year 2011 and beyond in view of the fol-

lowing:

The Overall Saudi economy: The Saudi economy

remains strong according to the latest facts and gures

from SAMA; while ination is the main cause of concern.

Both economic growth and ination are expected to in-

crease given the recently announced new government

programs. Economy is likely to grow at the real rate of

(7.5%) in 2011 on the back of strong oil sectors growth,

following last years growth of (3.7%).

Non-Oil Private Sector Economy: There is a sharp

improvement in the performance of the Saudi Arabias

non-oil private sector economy in view of healthy growth

in private companies activities. Non-oil private sectors

real GDP growth is expected at (5.4%) in 2011 compared

to (4.3%) in 2010. An ambitious ninth ve year develop-

ment plan of the Kingdom views non-oil sector driving

fastest GDP growth in three decades.

High oil prices: Crude oil market remained bullish

in early 2011, with OPEC crude oil prices hitting their

highest level ($120.30 a barrel on 11 April 2011) since

September 2008. The OPEC Basket crude oil price aver-

aged $106.24 a barrel during Jan-May 2011 compared

to $76.66 per barrel in the same period of 2010, recording

an increase of (38.6%).

Kingdoms 2011 Budget: Kingdoms scal position is

expected to remain comfortable on the back of a strong

global oil demand. Saudi Arabia announced the highest

national budget in its history with plans to spend SR580

billion in 2011. The high oil price environment enabled

Saudi Arabia to post a very strong budget surplus of

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SR108.5 billion in 2010 compared to a decit of SR86.6

billion in 2009 and is expected to post another surplus of

around SR100 billion in 2011.

Commodity Exports and Non-Oil Exports: Total

Kingdoms exports stood at $251 billion in 2010, record-

ing an increase of (31%) compared to 2009 on the back

of a strong oil sector. Non-oil sectors exports reached

$35.9 billion in 2010, recording an increase of (22.8%)

compared to 2009.

Increased Current Account Surplus: In the light of

strong oil sector, the current account surplus reached

SR145.5 billion ($38.8 billion) in 2010 almost twice the

2009 surplus, which is expected jump to SR429 billion

($114.4 billion) in 2011.

Kingdoms Net Foreign Assets: Foreign assets

swelled to SR1652 billion at the end of 2010 comparedto SR1520 billion in 2009. According to SAMA, the King-

doms net foreign assets surged to SR1802.5 billion

(US$480.6 billion) in May 2011, hitting a new record, due

to the increase in oil revenues.

Gross Ofcial Reserves (GOR): GOR of the King-

dom stood at SR1669.3 billion ($443.7 billion) in 2010

compared to SR1537.9 billion ($408.8 billion) in 2009, re-

cording an increase of (8.5%). In the rst quarter of 2011,

GOR reached SR1746.7 billion, recording an annual in-

crease of (10.8%) compared to the same quarter of the

previous year. GOR are expected to increase to $517.8

billion by the end of 2011.

Bank Deposits: Saudi bank deposits stood at

SR984.85 billion in 2010 compared to SR940.55 billion

in 2009, registering an increase of (4.7%). In the rst

quarter of 2011, total deposits reached SR1043.4 billion,

recording a yearly increase of (13.3%) compared to the

same quarter of the previous year.

Bank Credit: Total bank credit grew by (5.2%) to

SR775.3 billion in 2010, following a decline of (-1.1%)

in 2009. Long term, medium term and short term cred-

its increased by (13.1%), (8.3%) and (1.5%) to SR192.3

billion, SR126.8 billion and SR456.2 billion, respectively

during 2010. Total bank credit reached SR793.2 billion

in the rst quarter of 2011, recording an annual increase

of (6.2%) compared to the same quarter of the preiousyear. Long-term, medium-term and short-term credits in-

creased by (15.2%), (10.7%) and (1.5%) to SR204.38

billion, SR130.57 billion and SR458.24 billion, respec-

tively. Saudi bank credit extended to the commerce sec-

tor represented (24%) of the total credit, manufacturing

& processing (11.9%), and building and construction

(7.1%) in the rst quarter of 2011. Thus the growth mo-

mentum in bank lending is continuing, enhancing inves-

tors condence.

Ination - One of the Major Challenges: The aver-

age ination rate, as measured by annual changes in the

cost of living indices, during 2010 rose to (5.4%) com-

pared to the average annual ination rates of (5.1%) in

2009 and (9.9%) in 2008. Yearly ination in the rst quar-

ter of 2011 stood at (5%) mainly attributed to (8.2%) rent

ination, (5.9%) food ination and (8.4%) ination in other

expenses and services (including personal hygiene and

personal shopping). An annual rate of ination is expect-

ed to remain higher at (6%) in 2011.

Saudi Gross Fixed Capital Formation (GFCF): As

a percent of GDP at current prices, GFCF is expected

to have reached (23.9%) in 2010 compared to (24.9%)

in 2009, which is likely to rise to (24.8%) in 2011 result-

ing in a growth in business activity. Non-oil private sec-

tor investment to GDP is expected to rise to (13.2%) and

(13.6%) in 2010 and 2011, respectively, compared to

(11.9%) in 2009.

Source: IMF Reports, 2010 & 2011- Ministry of Economy and Planning, KSA - SAMA reports, and MAS Centers estimates.Note: e= expected and f = forecast

Table (3): Saudi Macro-Economic Indicators

Description 2006 2007 2008 2009 2010(e) 2011(f)

Nominal GDP($B) 356.2 384.7 476.3 372.7 434.7 578.6

Nominal GDP Growth (%) 12.8 8.0 23.8 -21.8 16.6 33.1

Real GDP Growth (%) 3.2 2.0 4.2 0.2 3.8 7.5

Real Non-Oil GDP Growth (%) 5.1 4.7 4.3 3.5 4.4 5.4

Real Private GDP Growth (%) 6.1 5.5 4.6 2.7 3.7 4.2

Ination CPI (%) 2.2 4.1 9.9 5.1 5.3 6.0

Gross Ofcial Reserves ($B) 225.2 305.3 441.9 408.6 443.7 517.8

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MIDDLE EAST TOURISM

In the Middle East and North Africa region, Africa was the

only sub-region to show positive gures in 2009, main-

tained growth in 2010 and consolidated results by ex-

panding (7%) in the rst two months of 2011. But YTD

(Jan-Apr 2011) arrivals data available for the Middle East

points to a negative growth trend affected by the political

unrest in contrast to the positive growth in trafc. This

difference can be explained by a continued growth in out-

bound travel which offset the decline in arrivals, sustain-

ing the growth in air transport demand, albeit at a slow-

er rate than in 2010. Overall, Africa region declined by

(-12.2%); while the Middle East increased by (+14.6%).

Tunisia, which attracted nearly 7 million arrivals in 2010,

suffered a decrease of (-44%) in the rst quarter of 2011.

Egypt, which accounts for over (20%) of all international

tourist arrivals to the Middle East recorded a decrease in

arrivals of (-45%). Jordan posted a weak growth of (2%)

and Lebanon (-13%) decline. The destinations such as

Morocco, UAE and Qatar seem to have beneted from

the temporary redirection of travel ows.

Political unrest will also have an important impact on tour-

ism ows to countries such as Libya and Algeria, where

substantial investment has been made in tourism infra-

structure over the last ve years. Tourism development in

these countries is now considered to be postponed for an

indenite time. However, the impact on tourism is likely to

be limited and short-lived.

International Tourist Arrivals

The Middle East was the fastest growing region in 2010,

recording an estimated (14.1%) rise in international tour-

ist arrivals to 60.3 million in contrast to a (-4.3%) decline

in 2009, according to the UNWTO. Africa, the only region

to show a positive gure of (3.7%) in 2009, maintained a

growth of (+6.9%) to 49.2 million in 2010. Many regional

neighbors have close cultural and religious links whichboost tourism trend. The large number of Arab expatri-

ates living and working in the Middle East travel frequent-

ly to their home towns, encouraging regional demand.

The Middle East regions tourism economy would rely

heavily on travelers from the GCC and even India and

China. Outlook for the Middle East region would depend

on intra-regional travel from countries such as Qatar, Ku-

wait, Saudi Arabia and Bahrain amid uncertainties in the

region. The Gulfs rapidly-expanding airplane industry,

especially low-cost carriers, is also a boost to inter-GCCtravel and a reason the industry has stayed aoat. De-

velopments in the low cost carrier segment in the Middle

East are starting to have a positive impact on increas-

ing the tourism share and opening up the markets to dif-

Outlook for 2011

Growth of tourism in the Middle East in the last few years

has been remarkable, although it was interrupted by the

world economic crisis in 2009, expectations for 2011

remain optimistic. The regions tourism is expected to

revive soon depending upon the political/economic con-

ditions in the MENA region. However, the Middle East

crisis is expected to be small and short-lived to the des-

tinations directly involved, with alternative destinations

picking up most of the track. The recent data show that

the international tourist arrivals to North Africa in the rst

two months of 2011 decreased by (-9.4%) compared to a

(6.2%) growth recorded in 2010. The international tour-

ist arrivals to the Middle East in the rst two months of

2011 decreased by (-9.8%) compared to a sharp growth

of (14%) recorded in 2010. From an optimistic viewpoint,

there is no reason why the local economies and tour-ism should not continue much as before, under new,

transitional or old governments. From a more realistic

point of view, the changes that are taking place create

uncertainty that at least in the short term is discourag-

ing international tourists, and the readiness with which

they recover their condence will depend on how events

unfold. As far as the organized market is concerned, tour

operators can hardly be expected not to respond to the

inevitable uncertainties.

Hotel occupancy rates in the rst four months of 2011are over 40 percentage points down compared to 2010

in North Africa but are actually higher in the Middle East

and Southern Africa. Average daily room rates are mostly

lower in the cities of the MENA region.

ferent types of tourists. UNWTOs Panel of Experts from

the Middle East evaluated 2010 as reecting the regions

strong performance.

Chart (11): International Tourist Arrivals in the

Middle East (Million)

Years

0

20

40

60

80

Million

2005 2006 2007 2008 2009 2010

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The GCC Economic Environment

The Gulf Cooperation Council (GCC) includes Saudi Ara-

bia, Kuwait, Bahrain, Qatar, Oman and the United Arab

Emirates. The bloc of six states was created in 1981 to co-

ordinate political and economic policies. The GCC coun-

tries are seen as among the most inuential of the Orga-

nization of the Petroleum Exporting Countries (OPEC)

members. Leaders of the GCC countries are considering

requests by Morocco and Jordan to join its bloc...

The economy of the Gulf Cooperation Council (GCC) re-

gion is expected to surge at the real rate of (7.8%) in

2011, compared to a (5%) growth rate in 2010 and a mar-

ginal (0.2%) growth in 2009 on the back of a strong global

oil demand. Much of this acceleration in growth stemsfrom projected increases in oil output as GCC countries,

especially Saudi Arabia, raised production to cover the

loss of Libyan crude because of the current unrest. Cur-

rent events in the Middle East and North Africa region

are unprecedented and will take time to be digested.

Thus, despite the evident and robust economic support

being provided by GCC governments, the response by

the private sector will probably be slower than might be

expected.

Real non-oil GDP growth in the GCC is expected to rise to

(5.3%) this year, compared to (4.2%) and (2.9%) in 2010

and 2009, respectively, but the level remained signicantly

below the (8.3%) average annual growth achieved during

2006-2008 when the region last beneted from the com-

bination of high oil revenues and large public spending.

The GCC region has emerged from the global economic

crisis with its standing enhanced. It is believed that the

regions growing trade and investment links with other

emerging markets along with continued economic liberal-ization and corporate expansion, will see the GCC evolve

as one of the leading global economic hubs within the

next decade. The GCC regions scal and external bal-

ances are expected to improve markedly in response to

The Middle East Economic Environment

The term MENA stands for Middle East and North Af-

rica. MENA region extends from Morocco to Iran, includ-

ing the majority of both the Middle Eastern and Maghreb

countries. The MENA region has vast reserves of petro-

leum and natural gas that make it a vital source of global

economic stability. According to the Oil and Gas Jour-

nal (January 1, 2009), the MENA region has 60% of the

worlds oil reserves (810.98 billion barrels) and 45% of

the worlds natural gas reserves (2868.886 Trillion cubic

feet). As of 2011, 8 of the 12 OPEC nations are within the

MENA region.

The political upheaval in the Middle East and North Africa

has dominated recent economic developments in the re-

gion. Industrial production in both Egypt and Tunisia fell

by more than 15 percent during the rst few months of

2011. Although subject to signicant uncertainty, GDP isprojected to expand by only 1 percent in Egypt and 1.5

percent in Tunisia in 2011, before both economies were

expected to recover to almost (5%) growth in 2013. The

impact for the region as a whole is less marked, with

growth of (1.9%) in 2011, recovering to around (4%) in

2013 as capital ows and investor condence reestablish.

The Middle East and North Africa is going through a pe-

riod of unprecedented change. Even though it is clear

today that the popular uprisings are born of a desire for

greater political, social, and economic freedom, their tim-

ing came as a surprise to everyone. The roots of these

uprisings are political, as well as economic.

Until late 2010, the region was on track for a recovery

from the global crisis. Growth accelerated to (3.8%) in

2010 from (1.8%) in 2009, mainly driven by the regions

oil exporters. Nevertheless, the slow growth equilibrium

of the past years did not generate enough jobs for the

growing labor force. The unfolding events make it clear

that reforms, and even rapid economic growth as seenperiodically in Tunisia and Egypt, cannot be sustained

unless they create jobs for the rapidly growing labor force

and are accompanied by social policies for the most vul-

nerable. For growth to be sustainable, it must be inclusive

and broadly shared, and not just captured by a privileged

few. Widespread corruption in the region is an unaccept-

able offence to the dignity of its citizens, and the absence

of transparent and fair rules of the game will inevitably

undermine inclusive growth. At the same time, a socially

inclusive agenda will not survive unless macroeconomicand nancial stability prevails. Its absence can test even

countries with strong institutions, as the recent global cri-

sis has shown. During the current period of turmoil and

uncertainty in the region, it is all the more vital to contain

rising scal imbalances, growing debt and debt-servicing

costs, ination, and capital ight. These threats to mac-

roeconomic and nancial stability-if not arrested quickly-

could undermine condence and derail the pursuit of any

new social agenda.

Two developments mark the outlook: the unrest in the

region and the surge in global fuel and food prices. As a

result, the near-term economic outlook is subject to un-

usually large uncertainties stemming from the uncertain

political and security situation in a number of countries.

However, a relatively higher real GDP growth of (4.1%) is

expected for 2011 amid higher oil prices.

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rising oil prices and increased production levels. Over the

medium-term, GCC countries will need to pursue scal

consolidation to safeguard the sustainable use of hy-

drocarbon revenue, while promoting diversication and

employment creation. Measures to support these goals

include reorienting spending toward social and develop-

ment needs, revisiting energy subsidies, and diversifying

the revenue base.In the GCC region, Qatar is likely to have achieved the

highest real growth rate of (16.3%) in 2010, followed by

Oman (4.2%), Bahrain (4.1%), KSA (3.7%), UAE (3.2%)

and Kuwait (2.0%).

Ination in the GCC region is expected to have ac-

celerated to (3.2%) in 2010 compared to (3.0%) in 2009,

which is manageable, the highest being in the KSA at

(5.4%), Kuwait at (4.1%), Oman at (3.3%), Bahrain at

(2.0%), UAE at (0.9%), and Qatar at (-2.4%). Ination forthe GCC region is likely to are up to (5.3%) in 2011 due

to increased oil prices, food and other commodity prices.

Table (4): GCC Regions Macro-Economic Indicators

Source: IMF Reports, 2010 & 2011 - MAS Center calculations.Note: e=expected and f= forecast

Description 2005 2006 2007 2008 2009 2010(e) 2011(f)

Nominal GDP($B) 657.3 793 899 1134 921 1085 1402

Nominal GDP Growth (%) 20.7 13.3 26.1 -18.8 17.8 29.3

Real GDP Growth (%) 6.9 5.9 5.8 7.2 0.2 5.0 7.8

Real Non-Oil GDP Growth (%) 8.0 9.0 8.0 2.9 4.2 5.3

Real Oil GDP Growth % 2.1 -0.9 5.5 -5.4 5.5 12.1

Ination CPI (%) 2.6 4.6 6.6 11.0 3.0 3.2 5.3

Gross Ofcial Reserves ($B) 193.4 278.1 422.5 514.6 485.5 540.7 648.4

Table (5): Real GDP Growth Rates of the GCC Countries

Country 2005 2006 2007 2008 2009 2010(e) 2011(f)

KSA 5.6 3.2 2.0 4.2 0.2 3.7 7.5

UAE 8.6 8.8 6.6 5.3 -3.2 3.2 3.3

Kuwait 10.4 5.3 4.5 5.0 -5.2 2.0 5.3

Qatar 7.6 18.6 26.8 25.4 8.6 16.3 20.0

Oman 4.0 5.5 6.7 12.9 1.1 4.2 4.4

Bahrain 7.9 6.7 8.4 6.3 3.1 4.1 3.1

Source: IMF Reports, 2010, 2011 & MAS Center.Note: e=expected and f= forecast

GLOBAL TOURISM

International arrivals growth closely correlates with that

of airline passenger trafc so far in 2011 both at globaland regional levels according to WTTC. In Q1 2011, ar-

rivals growth was strong in Europe and Asia Pacic and

negative in Africa (including Egypt). YTD arrivals data

available for the Middle East points to a negative growth

trend affected by the political unrest in contrast to the

positive growth in trafc. This difference can be explained

by a continued growth in outbound travel which offset the

decline in arrivals, sustaining the growth in air transport

demand, albeit at a slower rate than in 2010. Overall, Af-

rica region declined by (-12.2%); while the Middle Eastincreased by (+14.6%).

The hard hit countries in the rst four months of 2011

(compared to the same period of the previous year) were:

Egypt (-45.3%) decline, Tunisia (-44.1%), Japan (-27.1%),

Jordan (-5.5%), Mexico (-5.1%), Canada (-5%), Lebanon(-4.4%). The countries recording positive growth includ-

ed Bahrain (27.6%), Taiwan (26.7%), Thailand (24.8%),

Nepal (18.4%), Turkey (15.6%), Hong Kong (14.4%), In-

dia (11.5%), Spain (9.9%), Germany and Iceland (9.2%)

each, Mexico (5.1%), South Korea (3%) and USA (2%).

International Tourist arrivals grew by around (7.5%) year-

ly during the rst four months of 2011, consolidating the

rebound registered in 2010. Growth was positive in all

world sub-regions in Apr 2011 with the exception of the

Africa region (-12.2%). Middle East recorded the highestgrowth of (14.6%), followed by Europe (11.6%), Asia-Pa-

cic (5.7%) and Americas (3.5%).

Tourism has been identied by more than half of the

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worlds poorest countries as an effective means to take

part in the global economy and reduce poverty. To maxi-

mize tourisms role in helping countries reach their de-

velopment goals, UNWTO has come together with seven

UN agencies and programs to boost tourism as an instru-

ment for development. Tourism is increasingly a major

source of growth, employment, income and revenue for

many of the worlds developing countries. Tourism hasbecome one of the main engines of socioeconomic prog-

ress for many countries and a development priority for a

majority of the LDCs.

International Tourism-2011 (Preliminary estimates)

Worldwide, tourism rebounded strongly with international

tourist arrivals is estimated to have reached 940 million in

2010, recording an increase of (6.6%). This was primarily

driven by emerging economies on the back of improved

condence and economic conditions worldwide. Emerg-

ing economies recovered more quickly, leading the world

recovery with a growth rate of (8.3%) compared with

(5.1%) for advanced economies. All world regions posted

positive growth in international tourist arrivals in 2010

over 2009. The recovery in international tourism is good

indeed, especially for those developing countries that

rely on the sector for much-needed revenue and jobs,

according to the UNWTO. In line with the broader eco-

nomic situation, the tourism sector is now seeing vary-

ing speeds of recovery and growth across the world andthis trend is expected to persist for the foreseeable future.

The challenge now will be to consolidate this growth over

the coming years amid a still uncertain global economic

environment.

Receipts from International Tourism

World tourism receipts amounted to US$919 billion in

2010 compared to US$851 billion in 2009, recording an

(8%) increase. The year 2011 is expected to be a year of

moderate recovery and the tourism receipts are likely to

exceed $925 mark. In real terms (adjusted for exchangerate uctuations and ination), international tourism re-

ceipts increased by (5%) in 2010 as compared to an al-

most (7%) growth in arrivals in the preceding year, in-

dicating that in recovery years, arrivals tend to pick up

faster than receipts. In 2010, global receipts in real terms

grew by a (4.7%) compared to a decline of (-5.6%) in

2009. International tourism receipts of almost all regions

rebounded and increased in real terms, with the excep-

tion of Europe. The Middle East recorded the the highest

Prospects in 2011

Growth is expected to continue in 2011 but at a more

moderate pace. UNWTO predicts an increase in inter-national tourist arrivals in the range of 4% to 5%. The

impacts of recent developments in North Africa and the

Middle East, as well as the devastating earthquake and

Chart (12): Trends (%) in International Tourist Arrivals(2006-2011)

%

Change

Years

World Europe Asia-Pacific AfricaAmericas M.East

2006

10

0

20

30

-10

-20

2007 2008 2009 2010(e) 2011(f)

tsunami that hit Japan in March 2011 are not expected to

be signicant.

Destinations in Europe and South America are so far

performing better than anticipated. On the whole, a tem-

porary redistribution of trafc, together with an increase

in intra-regional travel as opposed to travel between re-

gions, is likely to occur.

The UNWTO Panel of Experts remains very condentthat overall, international tourism will continue to con-

solidate the growth recorded last year. Although recent

developments in North Africa and the Middle East, and

the tragic events in Japan will affect the results of their

respective regions, overall growth in international tourism

is not expected to be signicantly impacted upon. More-

over, the fall in demand in Tunisia, Egypt and Japan is

expected to have bottomed out and the recovery of these

important destinations will surely be consolidated during

the year. Tourisms quick recovery in 2010 and encourag-ing results of the few months of 2011 conrm the sectors

resilience in the medium and long term, conrming that

it is a key driver of growth and employment generation.

Chart (13): World Tourism Receipts (2006-2010) - US$ Bil

Years

0

200

400

600

800

1000

US$

Bil

2005 2006 2007 2008 2009 2010

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The world top ve destinations ranked according to the

international tourist arrivals in 2010 were as follows:

real growth of (14.4%) in 2010, then Asia and the Pacic

(12.9%), Americas (5%) and Africa (3.4%); while Europe

recorded a (-0.4%) decline.

Table (6): The World Top Five Tourist Destinations Ranked in Terms of International Tourist Arrivals,Tourist Receipts and Tourist Spending in 2010

DestinationIntl Tourist

Arrivals (mil)

RankIntl Tourist

Receipts ($ Bil)

RankIntl Tourist

Spenders ($ Bil)

Rank

France 76.8 1 46.3 3 39.4 5

USA 59.7 2 103.1 1 74.6 2

Spain 52.7 4 52.5 2 -

China 55.7 3 45.8 4 54.9 3

Italy 43.6 5 38.8 5 -

Germany - - 77.7 1

UK - - 48.6 4

The World Economic Environment

According to the Global assessment of national econo-

mies (Global advisor - a monthly Economic Plus report

April 2011), the average global national assessment

slid backwards in Mar 2011 down three points from Feb.s

(41%) to (38%). This is the average of citizens in 24 coun-

tries who rated their national economy to be good. The

four countries that had increases were Saudi Arabia (+4

points to 85%), followed by Argentina (+2 points to 43%),

Indonesia (+2 points to 40%) and Russia (+1 point to

26%). Regionally, there is no clear winner this month as

all have witnessed declines: Middle East/Africa (56% na-

tional, 39% local) rivals the BRIC nations (55% national,

41% local).

The world economic recovery continues, and the global

economy is expected to grow at about (4.4%) in 2011,

down modestly from (5%) in 2010. Real GDP in advanced

economies and emerging, and developing economies isexpected at (2.4%) and (6.5%), respectively. Unemploy-

ment remains high in advanced economies and new mac-

roeconomic risks are building in emerging market econo-

mies. Financial conditions continue to improve, although

they remain unusually fragile. In many emerging market

economies, demand is robust and over-heating is a grow-

ing policy concern. Developing economies, particularly in

Sub-Saharan Africa, have also resumed fast and sustain-

able growth. While industrial activity is decelerating in De-

veloping Asia, the region is still expected to contribute themost to global growth in 2011, with China growing by (9%)

and India by (8.1%). Rising food and commodity prices

pose a threat to poor households, adding to social and

economic tensions, notably in the Middle East & North

Africa (MENA) region. Oil price increases, information on

oil supply, and spare capacity suggest that that the dis-

ruptions so far would have only mild effects on economic

activity. An earthquake in Japan has exacted a terrible

human toll. Its macroeconomic impact is projected to be

limited, although uncertainty remains elevated.

The spike in crude prices has affected global ination

outlook negatively as emerging market economies have

been joined by many developed economies in terms of

rising consumer price ination. Consumer ination has

breached upper limit of central banks comfort zone in the

UK and Euro area. Central bank in the area seems to

start raising interest rate in the next month.

Despite the recent unrest, the global economy has con-

tinued to enjoy a solid recovery. The main reason for

the growth uptrend is the healthy growth in the develop-

ing countries. China and India are expected to grow by(9.6%) and (8.2%), respectively in 2011. Ination is be-

ginning to pose a challenge for policy makers in both the

developed and the developing countries. The following

challenges still persist about the world economy:

Increased uncertainty regarding the sovereign debt

crisis in the European Union.

The deterioration of scal balances and the persis-

tence of high unemployment in advanced economies.

Economic recovery in major tourism source markets,especially in Europe and the USA, is still fragile.

Security threats as well as the potential for increased

costs for travelers.

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In continuation of the MAS Centers *(SCTA) estimation

of Transport and Tourism Price Index (TTPI) for Saudi

Arabia, in this report the TTPI has been calculated for

Mar 2008, Mar 2009, Mar 2010 and Mar 2011.

The internal tourists experienced an annual TTPI ina-

tion rate of (6%) in Mar 2011 compared to (-1.1%) ex-

perienced in Mar 2010. A relatively higher ination rate

experienced by internal tourists is attributed to the follow-

ing top ve inationary items showing percent increasesduring Mar 2010 to Mar 2011:

However, the prices of some of the tourist products/ser-

vices declined in the past year (Mar 10 to Mar 11), the

only three decliners were as below:

Table (7): Global Real GDP Growth Rates (%)

Description 2005 2006 2007 2008 2009 2010(e) 2011(f)

World 4.6 5.2 5.3 2.8 -0.5 5.0 4.4

Advanced Economies 2.7 3.0 2.7 0.2 -3.4 3.0 2.4

Middle East - North Africa (MENA) 5.3 5.8 6.2 5.1 1.8 3.8 4.1

GCC 6.9 5.9 5.8 7.2 0.2 5.0 7.8

1. IMF, World Economic Outlook (WEO) update January 2011 2. SAMA Annual Report 2009 3. MAS Centers calculationse = expected and f = forecast

Sources:Note:

Table (8): Selected Countries Real GDP Growth Rates (%)

Countries 2005 2006 2007 2008 2009 2010(e) 2011(f)

USA 3.1 2.7 1.9 0.0 -2.6 2.8 2.8

Euro Area 1.7 3.0 2.9 0.5 -4.1 1.7 1.6

Japan 1.9 2.0 2.4 -1.2 -6.3 3.9 1.4

China 11.3 12.7 14.2 9.6 9.2 10.3 9.6

India 9.2 9.7 9.9 6.4 6.8 10.4 8.2

Saudi Arabia 5.6 3.2 2.0 4.2 0.6 3.7 7.5

1. IMF, World Economic Outlook (WEO) 2010 & 2011 2. SAMA Annual Report 2009 3. MAS Centers calculationse = expected and f = forecast

Sources:Note:

Tourism and Transport Price Index (TTPI) (MAR. 2011)

1. Cost of Rent a car with driver -10.2%

2. Cost of Rest house rent -3.4%

3. Out-of-home meal Pizza -0.2%

1. Furnished Flat Rent +34.4%

2. Cost of hotel stays +12.8%

3. Out-of-home meal Lunch +5.7%

4. Out-of-home meal Meat Shawarma +4.1%

5. Transport fee for domestic air +2.9%

Chart (15): Tourism (TTPI) Ination vs. Cost of living

(CLI) Ination Annual (%) Mar 08 - Mar 11

10

5

15

20

0

-10

-5

%

Change

Years

TTPI. General

Accommodation

Food Shopping

Transport Others

Mar. 08 Mar. 09 Mar. 10 Mar. 11

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www.mas.gov.sa

Glossary of abbreviations used in this report

STO Saudi Tourism Outlook

1431 H Hijra (Arabic) Year 1431

2010 G Gregorian (Engl ish ) Year 2010

SR Saudi Riyals

GDPGross Domestic Product (Total value of goodsand services produced within the economyduring a period)

Non-Oil GDP Total GDP Minus Oil Sectors GDP

UNWTO United Nations World Tourism Organization

GCCGulf Cooperation Council (composed of sixcountries)

OPEC Organizat ion for Petroleum Exporting Countries

MENA Middle East and North Africa

MAS CenterTourism Information, statistics & researchdepartment

SCTA Saudi Commiss ion for Tour ism and Ant iqui ties

KSA Kingdom of Saudi Arabia

TTPI Transport and Tourism Price Index

US$ United States Dollar

YTDYear-to-date (Starting from the start of the yearunder consideration till the current month)

DEC. December

B.O.P. Balance of Payments (Total receipts less totalpayments)

T.B.O.P

Tourism Balance of Payments (Receipts ob-tained from inbound tourists into Saudi Arabiaminus payments made by the outbound tour-ists from Saudi Arabia to the rest of the world)

SAMASaudi Arabian Monetary Agency (Central Bankof Saudi Arabia)

CPI Consumer Price Index (Ination Index)

IMF International Monetary Fund

GFCF Gross xed capital formation

SRM Million Saudi Riyal

SRB Billion Saudi Riyal

GIH Global Investment House

UAE United Arab Emirates

FIFA Federat ion of International Football Association

UK United Kingdom

EURO AREA Group of European Countries

USA United States of America

EU European Union

WEO World Economic Outlook

CLI Cost of Living Index

UN United Nations

LDC Least developed countries

WHO World Health Organization

ILO International Labor Organization

IAEA International Atomic Energy Agency

WMO World Meteoro logical Organization

IMO International Maritime Organization

ICAO International Civi l Aviation Organization

Disclaimer: Saudi Tourism Outlook (STO) is a monthly electronic publication of the MAS Centre of the SCTA. A part of this publication may be reproduced or duplicated provided the completei i di d Whil h b k i i hi bli i MAS C f h SCTA li bili h f di i l l i i f i

sto june 2011

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