-
The macro-economic conditions in Saudi economy are improving
-
Encouraged by spending in many sectors, the overall health of the economy is positive
Spurred by spending in the local market such as retail, transport, health, and food and beverages sectors, the overall health of the Saudi economy has shown improvement in the recent past, a report said.
Saudi Central Bank’s April statistics looks healthy, added the report by Al Rajhi Capital, a leading financial services provider in the kingdom, noting that POS transactions continued its uptrend… Credit to the private sector increased 15.6% year-on-year (y-o-y) in April 2021, while bank claims on the public sector increased 11.5% y-o-y and the deposits grew by 9.0% y-o-y in April 2021. This helped money supply M3 to expand 8.3% y-o-y in April 2021.
Further, the banking sector’s net profit before zakat and tax rose (+31.8% y-o-y) to SR4.383 billion ($1.16 billion) in April 2021 as compared to the increase of 13.8% y-o-y in March 2021. Moreover, growth in mortgage continued with 82.1% y-o-y rise in April 2021, driven by House and Apartment mortgages, which grew 78% y-o-y and 127% y-o-y, respectively; while LDR came in at 77.4% in April 2021.
Meanwhile, Saudi Central Bank’s foreign reserves fell 1.8% y-o-y in April 2021 (-5.2% y-o-y in March 2021). According to flash estimates by GASTAT, the seasonally adjusted real GDP of Saudi Arabia recorded a negative growth rate of -0.1% in Q1 2021 with respect to the fourth quarter of 2020.
This slight negative growth rate was mainly due to the decline in oil activities by 5.1% as a result of additional crude oil production cuts started by February 2021, while the non-oil activities and government service activities recorded a positive growth of 4.0% and 0.5%, respectively. Furthermore, Saudi Arabia’s population grew by 2.3% to 35.01 million last year from 34.22 million in 2019, according to GASTAT preliminary estimates in the middle of the year 2020.
Q1 2021 Budget: Saudi Arabia’s Ministry of Finance announced the Q1 2021 budget. In Q1 2021, the budget deficit declined by 78% to SR7.4 billion from SR34.1 billion in Q1 2020. Total actual revenue reached SR204.8 billion, a rise of 7% y-o-y. Oil revenue hit SR116.6 billion, while non-oil revenue stood at SR88.2 billion. Total expenditures stood at SR212.2 billion, a decline of 6% y-o-y.
Further, oil exports increased by 75.0% y-o-y; while non-oil exports increased 42.9% y-o-y in March 2021. Non-oil exports segment-wise: “Plastics & Rubbers” increased by 57.8% y-o-y, accounting for ~33.6%, “Chemical Products” rose by 28.5% y-o-y, accounting for ~27.9% of total non-oil exports. Further, merchandise imports increased by 14.0% y-o-y in March 2021. This increase was due to the rise in many sectors compared to March 2020, mainly ‘vehicles and associated transport equipment’ (+30.3%) and ‘pearls, precious stones, imitation jewellery’ (+354.9%).
Meanwhile, the cost of living index remained in the positive trajectory and increased by 5.3% y-o-y in April 2021 (+4.9% y-o-y in March 2021), mainly driven by a rise in VAT from 5% to 15% in July 2020. Major support came from two segments, ‘Food and Beverages’ (+8.4% y-o-y) and ‘Transport’ (+14.9% y-o-y).