Saudi Arabia's economic outlook for the second half of 2010 remains sound, despite uncertainty from the European debt crisis, as its government-financed infrastructure expansion gains momentum, economists at Banque Saudi Fransi said.

Economists, including John Sfakianakis, maintained their 2010 gross domestic product growth view for the oil-producing desert kingdom at 3.9 per cent.

They raised their government sector growth projection to 4.6 per cent from 4.1 per cent, saying the sector is poised for its fastest growth in 13 years as it acts as the key financier of strategic projects now that bank private sector loan growth remains subdued.

'We believe sufficient domestic catalysts exist to support a reasonable economic recovery this year, despite tenuous global circumstances,' the economists said.

They, however, said oil sector expansion looks set to be slower than expected, and reduced expansion forecast for the sector to 3.7 per cent from 4.1 per cent.

The economists also revised their annual oil price forecast to $76 a barrel from $78, suggesting a period of price weakness in the second half of the year. – Reuters