Saudi Arabia’s economy was robust in May. Indicators of consumer spending maintained solid growth in May leading to record highs for both cash withdrawals and point of sale transactions, according to a report by Jadwa Investment.
The report said annual growth in bank lending to the private sector remained solid in May, though the additional credit issued during the month slowed compared with previous month. Bank holding of treasury bills pushed bank lending to the public sector higher.
Bank deposits rose for the third consecutive month in May, pushing the year-on-year growth to its highest level since June 2009. Bank excess deposits at SAMA (Saudi Arabian Monetary Agency) remained high while loan-to-deposit ratio was broadly unchanged in May, giving scope for further lending growth.
The Jadwa report said Saudi Arabia’s year-on-year inflation in May slowed to its lowest since December 2012 owing to a fall in the core index while food and rents remained high.
The Kingdom’s nonoil exports and imports maintained their positive trend for the third consecutive month. Petrochemical exports were the highest this year, though it remains lower than a year ago.
Brent crude prices moved within a small range of $ 100-$ 105 per barrel for the third consecutive month in June. Potential monetary policy adjustment in the US is expected to have a temporary impact on oil prices, the report added.
The dollar strengthened in June against most advanced currencies owing to potential impact of scaling back monetary policy stimulus by the US Fed. A shift to slower growth in China and the outlook for higher interest rate in the US have also put pressure on emerging market currencies.
The Tadawul All-Share Index (TASI) maintained its upward trend during June, despite recent global equity markets turbulence and heightening regional political tensions. Average volumes improved to SR 6.3 billion up from SR 5.5 billion in May, the Jadwa report said. Only four of the fifteen sectors were up in June. Real estate development and banks were the best performing sectors, benefiting from positive domestic economic outlook.
The new Capital Market Authority (CMA) regulation introduced last month continued to push speculative sectors down.
The report said cement sales followed the regular downward trend before the summer months, but remained higher than a year earlier.