Saudi Arabia’s economic indicators appear to be improving as per the latest monthly economic data released by Saudi Arabian Monetary Authority (Sama), said Al Rajhi Capital, a top financial services provider in the kingdom.

Sama foreign reserves increased for the eighth consecutive month (+2.0 per cent y-o-y; flat m-o-m) in November.  Credit to the private sector rose by the fastest pace in two years (+2.3 per cent y-o-y; +0.4 per cent m-o-m) in November, while credit to the public sector also recorded a rise (+17.5 per cent y-o-y; +0.3 per cent m-o-m).

Further, consumer spending has continued to rise in November, as indicated by the POS transactions (+18.0 per cent y-o-y; +3.0 per cent m-o-m) and ATM cash withdrawals (+1.7 per cent y-o-y; -3.9 per cent m-o-m).

Remittances from Saudi nationals (-39.5 per cent y-o-y) and non-Saudi nationals (-17.6 per cent y-o-y) dropped in November for the second straight month. The cost of living index increased at the fastest pace (+2.8 per cent y-o-y; -0.3 per cent m-o-m) in eight months in November, driven by the rise in ‘Food & Beverages’ and ‘Transport’ sectors.

Meanwhile, Saudi Arabia announced biggest-ever budget for 2019, where the revenue is set to grow by 9 per cent y-o-y to SR975 billion ($260 billion) (SR895 billion in 2018), while expenditure is set to increase by 7 per cent y-o-y (SR1,106 billion vs SR1,030 billion in 2018).

Al Rajhi expects the continuation of the cost of living allowances in 2019 to increase the total government’s expenditure by SR22 billion. Meanwhile, the government aims to reduce the deficit as a  per cent of GDP to 4.2 per cent in 2019 as against 4.6 per cent in 2018.

The increase in expenditure will help boost economic activity by pushing up growth and jobs, said Al Rajhi, adding that as per its calculations, the implied oil price (WTI) should be $70 per barrel for the fiscal revenue target to meet, which is achievable since oil prices are not sustainable at these levels. Further, for fiscal breakeven in 2019, the implied oil prices are $84 per barrel.

Saudi Arabia’s fiscal deficit for 2018 came at SR136 billion, lower than pre-announced budget expectation of SR148 billion (but in-line with our SR138 billion expectation). For 2019, the Kingdom expects the revenue to be SR975 billion (SR895 billion in 2018) and the expenditure to be SR1,106 billion (SR1,030 billion in 2018). – TradeArabia News Service