Saudi Arabia’s gross domestic product (GDP) fell by 0.5 per cent in the first quarter compared to an annual rise of 2.2 per cent for the same period last year, pulled down mainly by the drop in oil prices, according to a report.

However, the non-oil sector grew 0.6 per cent for the same period with the backing from the non-oil private sector which grew 0.9 per cent, said Al Rajhi Capital, a leading provider of financial services in the kingdom, in its report.

The non-oil sector grew 0.6 per cent supported by the non-oil private sector (over 0.9 per cent), while the non-oil government sector contracted marginally (down 0.1 per cent). The oil sector contracted by 2.3 per cent due to the drop in crude oil production, said the report.

Banking sector credit growth slowed down to 0.6 per cent y-o-y (over 0.5 per cent m-o-m). Data till Q1 showed that credit to transport and communication, utilities and health services, commerce and services sectors increased sequentially, while credit to building and construction, mining, government and other sectors decreased.

Meanwhile, money supply (M3) grew 0.4 per cent y-o-y in May, compared to over 0.7 per cent in the previous month. This was mainly owing to an 11 per cent y-o-y increase in Time and Savings deposits to benefit from higher SAIBOR rates (on a y-o-y basis) while M1 was mostly flat.

Deposits grew 0.5 per cent y-o-y in May (down 0.8 per cent m-o-m). While time & savings deposits rose 11 per cent y-o-y, demand deposits were mostly stable (over 0.8 per cent y-o-y). The proportion of demand deposits stood at 62.3 per cent (from 62.1 per cent in May 2016), while proportion of time and saving deposits increased to 28.5 per cent from 25.7 per cent in the same period last year.

Banking sector’s monthly profit rose by 3.4 per cent y-o-y in May 2017 (down 2.8 per cent y-o-y in the previous month), recording the first rise four months, said the report by Al Rajhi Capital.

Foreign reserve assets declined 0.2 per cent m-o-m in May 2017, versus the monthly drop of 1.7 per cent in April 2017, to stand at SR1.87 billion ($499 billion).

According to the report, the cost of living index prevailed in the deflation territory in May 2017 for the fifth consecutive month, primarily due to falling prices in food and beverages (down 2.3 per cent), and transport sectors (down two per cent). However, prices in communication (over 2.1 per cent) and education (over 1.8 per cent) sectors increased.

Consumer spending growth slowed slightly, rising 6.4 per cent y-o-y, down from the 11.4 per cent y-o-y growth in the previous month.

Data showed that spending growth was primarily in restaurant & hotels (over 17.3 per cent y-o-y), and food and beverage (over 26.8 per cent y-o-y) segments, which can be attributed to Ramadan partially falling in the month of May and vacations, said Al Rajhi Capital in its report.

On the other hand, spending on clothing and footwear were down 4.6 per cent y-o-y, while transport sector was down 6.8 per cent y-o-y, it added.-TradeArabia News Service