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Saudi economic activities showing signs of recovery, says report

RIYADH, March 5, 2021

Saudi Arabia's economic activities are showing a sign of improvement after the pandemic contraction, said Al Rajhi Capital, a leading provider of financial services in the kingdom, citing the flash estimates by GASTAT.
 
The seasonally adjusted real GDP of Saudi Arabia recorded a positive growth rate of +2.8% in Q4 2020 with respect to the third quarter of 2020, supported by a decline in Covid-19 cases and the easing of restrictions around the Kingdom, stated the report. 
 
On a seasonally adjusted y-o-y basis, GDP declined by 3.8% in Q4 2020, according to Al Rajhi Capital.
 
As per Sama’s January statistics, Saudi Arabia was witnessing a pick-up in economic activities across the kingdom. Credit to the private sector increased 15.5% y-o-y in January 2021, while bank claims on the public sector advanced 17.8% y-o-y and the deposits grew by 9.3% y-o-y in January 2021, it stated. 
 
This helped money supply M3 to expand 9.2% y-o-y in January 2021, supported by M1 (+15.6% y-o-y) and M2 (8.9%), stated Al Rajhi Capital.
 
.According to the report, POS transactions also continued its robust uptrend, growing 30.6% y-o-y in January 2021, driven by increase in ‘Food & Beverages’ (+58.6% y-o-y), ‘Restaurants & Hotels’ (+54.9% y-o-y), ‘Health’ (+29.1% y-o-y) and ‘Clothing & Footwear’ (+6.4% y-o-y) segments. The spending in the local market, especially in the retail, food & beverages, and health segments, continues to support the economy. 
 
The banking sector profits fell slightly (-1.5% y-o-y) to SAR 5, 146mn in January 2021 as compared to the decline of 44.1% y-o-y in December 2020, showing a good improvement.
 
Moreover, growth in mortgage continued with 65.5% y-o-y rise in January 2021, driven by House and Apartment mortgages, which grew 63% y-o-y and 90% y-o-y, respectively; while LDR came in at 75.9% in January 2021 vs. 75.0% in December 2020, Al Rajhi Capital said in the report.
 
However, Sama foreign reserves fell 10.3% y-o-y in January 2021 (-9.2% y-o-y in December 2020).  Overall, the macro-economic conditions in the Kingdom are improving
 
Meanwhile, the cost of living index remained in the positive trajectory and increased by 5.7% y-o-y in January (+5.3% y-o-y in December 2020), mainly driven by a rise in VAT from 5% to 15% in July 2020. 
 
Major support came from two segments, which are ‘Food and Beverages’ (+12.3% y-o-y) and ‘Transport” (+9.6% y-o-y). Further, “Furnishings, Household Equipment”, “Communications” and “Restaurants & Hotels” increased by 7.4%, 13.8%, and 6.9%, respectively, according to the report. 
 
Further, remittances from Saudi nationals increase 9.4% y-o-y in January 2021 (-3.3% y-o-y in December 2020); whereas remittances growth from non-Saudi nationals increased 11.7% y-o-y in January 2021 (+16.1% y-o-y in December 2020), it added.-TradeArabia News Service



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