Saudi Arabia’s economy is likely to grow five per cent this year, up from an earlier forecast of 3.9 per cent, as a result of the recent economic stimulus measures launched by the government.

The country’s plan to spend a further USD 93 billion will boost the country’s real GDP performance in 2011, Business Monitor International said.

In a new forecast of the country’s economy, BMI analysts said, “the increase in public spending has led us to revise our forecasts for Saudi Arabia’s fiscal position, forecasting a drop in deficit of one percent”.

Saudi Arabia’s non-oil sector would play an increasingly vital role for the economy, as the government’s initiative to diversify the economy away from the hydrocarbon sector would bolster private consumption, BMI’s report said.

It also expects a resurgence in the country’s banking sector with asset growth forecast at about eight per cent in 2011, compared to a modest 2.5 percent last year.

The country’s central bank governor said the economy could grow around six percent this year rather than the 4.3 percent currently estimated.

Saudi Arabia has pledged to spend an estimated USD 130 billion, or around 30 percent of its annual economic output on new houses, creating jobs, unemployment benefit and other measures.

The International Monetary Fund (IMF) forecasts the biggest Arab economy will expand by 7.5 percent in 2011, while analysts polled by Reuters in March expect it to grow 4.5 percent.

Saudi Arabia relies on hydrocarbons for over 80 percent of budget revenue, and robust oil prices this year have further spurred the growth.