Saudi consumer boom may outlast state spending
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Saeed al-Mutairi, a bespectacled 27-year-old Saudi Arabian technical college graduate with a diploma in IT support, can finally afford to marry after two years looking for a job.
Now I'm saving enough to get married and my fiancee is very happy, said Mutairi, who started work two months ago as a cashier at the newest outlet in Riyadh of Jarir Bookstores, which is part of Jarir Marketing Co, Saudi Arabia's largest listed retailer.
A personal consumption boom in Saudi Arabia is lifting retailers such as Jarir, which sells electronics, books, art materials and office supplies.
Increased government spending is filling Saudi wallets through an expanding public payroll, unemployment benefits and the stimulus effect of new infrastructure projects.
Such booms have occurred in the past, in an economy which is sensitive to the ups and downs of the state-run oil industry. But this time, the strength of private consumption suggests it may have gained critical momentum, so it may stay high even when government spending eventually slows.
Public sector salaries increased last year, there are government initiatives to increase the number of Saudi nationals working in the private sector and to push companies to raise wages for Saudis. These things will maintain very strong retail growth, said Fahad Alturki, chief economist at Jadwa Investment in Riyadh.
Although Saudi Arabia's oil makes it a wealthy country, with per capita gross domestic product of about $23,000, many ordinary Saudis have uncertain job prospects and modest salaries by developed-world standards. Mutairi's monthly salary is about 5,100 riyals ($1,360).
But state support is now lifting the consumption of even poorer Saudis. Government spending has soared since 2011, partly in response to uprisings around the Arab world; to help maintain social peace, King Abdullah promised $110 billion of additional expenditure over several years on infrastructure and welfare.
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