Rising banking sector profits and increase in POS transactions along with a rise in non-oil exports indicate economic activity in Saudi Arabia is picking up, a report said.

However, private sector credit declined in September while deflationary trend continues to persist, noted the paper on Saudi Arabian Economy from Al Rajhi Capital, a leading financial services provider in the kingdom.

The government continued to bridge the deficit by a slew of bond issuances. Sama foreign reserves however only marginally declined (-0.5 per cent m-o-m) in September. Reforms continue to gather pace as showcased in the recently convened ‘‘Future Investment Initiative’ where the plan to build a $500 billion mega-city ‘NEOM’ was unveiled. Further, to increase foreign investor’s participation, the CMA is contemplating allowing foreigners to acquire stake of 10 per cent or more in companies.         

Saudi Arabia raised SR10 billion ($2.6 billion) from its monthly domestic sukuk sale. The Kingdom issued SR4.15 billion of 5 year bonds, SR1.35 billion of 7 year bonds and SR4.5 billion of 10 year bonds. The issue received nearly SR32.0 billion orders.

IMF expects the Kingdom’s GDP growth for 2017 to be close to zero dragged down by lower oil production in adherence to OPEC agreement. IMF has lauded the Kingdom for the fiscal reforms underway and expects the non-oil GDP growth to pick-up this year.

Market regulator (CMA) and the Kingdom’s authority for general investments (SAGIA) have signed a MoU to build a framework which can allow foreign investors to own 10 per cent or more of company’s share capital. The move will help bring in more foreign investments in the market.

Point-of-sale (POS) transaction value rose 6.4 per cent y-o-y in September 2017, rounding off a healthy 9.9 per cent POS transaction value growth in Q3 2017, as against Q1 and Q2 y-o-y growth of 6.1 per cent and 5.7 per cent respectively.

Overall, the consumer spending seems healthy despite relatively weak macro indicators. One of the reasons for the consistent increase in POS especially in food/restaurants could be the discounts provided for products in the related sectors and these discounts have contributed to deflationary pressures. – TradeArabia News Service