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Saudi construction sector credit to increase.
Photo by Jad El Mourad from Pexels

Credit growth to stay strong in Saudi Arabia

DUBAI, March 9, 2021

S&P Global Ratings has said that it now expects domestic credit growth in Saudi Arabia to stay strong in 2021-2022, following the sharp 14% year-on-year increase in 2020. 
 
"We anticipate solid mortgage and retail loan growth, supported by government efforts to meet Vision 2030 targets and strong demand for housing from Saudi nationals. Over the next couple of years, we forecast that mortgage portfolios will expand by about 30% a year," it said.
 
The Public Investment Fund has recently announced investment initiatives that are expected to spur corporate credit growth, mostly in construction-related industries. This will offset the gradual lifting of support aimed at easing the impact of the pandemic. The Covid-19 support package included the deferral of loans to small and midsize enterprises, it said.
 
"Overall, we project that credit growth will remain stable at about 10% in 2021-2022. This suggests that economic imbalances are in the expansionary phase; we see the risks as intermediate, at this stage. Under our revised assumptions, domestic private sector credit is likely to consistently exceed 80% of GDP in 2021-2022, compared with our earlier expectation of 75%," it said.
 
The economic risk score of '5' and Banking Industry Country Risk Assessment group of '4' remain unchanged, the report added. - TradeArabia News service



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