Economist Intelligent Unit: Can big spending save Saudi Arabia?: From our Chief Economist

Economist Intelligence Unit


From our Chief Economist

Thursday February 24th, 2011


Saudi Arabia's rulers can hardly have failed to notice with alarm the turmoil on their doorstep, and this week the royal family unveiled US$36bn worth of spending packages in an attempt to ensure the population's docility. As our ViewsWire service explains, the rise in global oil prices makes such massive subsidies more affordable, but even so the royal family will struggle to deny its citizens a political voice indefinitely. The dilemma is that offering even modest reforms could undermine the very basis of royal rule.

In China, we consider the prospect of revolution of a very different kind. The government wants to boost R&D spending in an effort to make the economy more competitive. This will create opportunities for high–tech foreign companies, but it will also mean a more challenging environment for them in some respects. Also from ViewsWire, we feature a timely article on the progress of the G20's quixotic attempts to rebalance the global economy.

From Risk Briefing, we offer a webcast on the problem of rising global inflation. John Bowler, from our global forecasting team, talks about what's driving this trend and how authorities should respond. Industry Briefing takes a look at India, where a new National Broadband Plan aims to connect around 160m households to broadband services by the end of 2014. Lastly, Executive Briefing looks at how companies can find new customers and connect with young people in fast–growing emerging markets through branding, collaborative innovation and social media.

How do these issues affect your business? Please let me know at: robinlbew@eiu.com

Best regards,


Robin Bew
Chief Economist

EDITOR'S CHOICE
SAUDI ARABIA: BEARING GIFTS
The king will spend an extra US$36bn, mainly on jobs and housing, to forestall protests at socio–economic ills. This will not quench the thirst for political change.
CHINA: FROM "R&C" TO R&D
China is trying to boost research and development in order to move the economy up the value chain. This will attract foreign investors, but will also make life harder for them.
WORLD: G20 DISAPPOINTMENT
G20 members have agreed on indicative guidelines for monitoring global economic imbalances, but the deal is unlikely to have much practical impact on policies.
WORLD: INFLATION ALERT
Our outlook for the global economy tells a story of continuing recovery, but our inflation forecast has risen from 2.7% to 3.3%. What are the implications?
INDIA: BROADBAND AMBITION
India's government is planning to invest more than US$13bn to bring fixed–line broadband services to most of the population, even in villages.
CO–CREATING YOUR BRAND WITH THE UNDER–30S
The powerful combination of youth, technology and rising consumerism is creating opportunities and challenges for companies looking for their "next billion" customers.

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