Saudi Arabia's economy is expected to grow by 4.1 per cent in real terms next year as domestic demand in the top Opec oil exporter will pick up, EFG-Hermes, a leading financial services company, said in a report.

In 2011, GDP growth in real terms will accelerate to 4.5 per cent with the non-oil sector improving, driven by government investment programmes and private consumption, the investment firm's chief economist Monica Malik said in a report.

'We expect a notable improvement in the economy in 2010 and 2011,' Malik said.

'Along with net exports making a positive contribution, we also expect to see a pickup of domestic drivers, especially as government projects announced in 2009 start to be implemented,' EFG said.

Non-oil GDP would rise in real terms by 4.4 per cent in 2010, up from 3 per cent this year, the report said, adding that annual inflation would be around 4.4 per cent on average next year.

'With only a tentative recovery in credit growth we expected limited (if any) increase in interest rates in 2010,' the Egyptian banking firm said. – Reuters