Saudi Arabia saw inflation grow by the slowest pace at least since 2012, by 1.7 per cent year-on-year (y-o-y) versus 2.3 per cent y-o-y in November, mainly owing to the fall in food prices, a report said.

Inflation in December grew by the slowest pace at least since 2012, by 1.7 per cent year-on-year (y-o-y) versus 2.3 per cent y-o-y in November, mainly owing to the fall in food prices.

 On a month-on-month (m-o-m) basis, prices continued to fall with the index dropping by 0.5 per cent in December compared to November, added the report by Al Rajhi Capital, a top provider of security brokerage and financial advisory services.

Total value of POS transactions declined 5.9 per cent y-o-y in December 2016 compared to 3.0 per cent y-o-y in November 2016, while ATM cash withdrawals dropped by 4.5 per cent y-o-y in December, higher than 2.2 per cent y-o-y fall in November.

As per data from Saudi Arabian Monetary Agency (Sama), annual value of POS transactions fell by 4.7 per cent in 2016, the first drop since the publication of the data in 1993. Similarly, aggregate annual ATM withdrawals fell by 3 per cent in 2016, first time since 2013 indicating the on-going weakness in consumer spending.

Non-oil private sector PMI expanded to 55.5 in December 2016, as against 55.0 in November, backed by a rise in output.

Brent crude March futures declined 2.3 per cent in January 2017 (+8.2 per cent m-o-m in December 2016), as investors were concerned over the increase in US shale oil production.

Real estate prices dropped 6.1 per cent y-o-y in 2016, versus a yearly fall of 2.6 per cent in 2015, as per the new real estate price index published by GASTAT.

Loan-to-deposit ratio recorded its lowest mark in 11 months as Banks’ claims on the private sector rose at a slower pace of 2.4 per cent y-o-y in December (+4.4 per cent y-o-y in November) while deposits grew marginally in December. On an annual basis, credit growth to private sector slowed down to 2.2 per cent in 2016, compared to 9.8 per cent in 2015 and last five years’ average growth rate of 12.3 per cent.

Saudi Arabia’s foreign reserve assets dropped in December 2016, albeit at a slower pace on a monthly basis. The Kingdom used around SAR 300bn in 2016 (SAR 435bn in 2015), mainly to plug fiscal deficit.

On the equity front, the TASI dropped 1.5 per cent in January 2017, as compared to a rise of 3.0 per cent m-o-m in December 2016.

At the World Economic Forum, the Saudi Finance Minister stated that the GDP growth is expected to be higher than 1 per cent in 2017, as against 0.4 per cent revised by the IMF, largely due to the planned investments in renewable energy coupled with a stimulus package for the private sector.

According to Sama Governor, the banking system has adequate liquidity and the central bank is unlikely to take any further steps to boost liquidity. – TradeArabia News Service