Saudi Arabia posts 1.5% rise in Q2 GDP

Saudi Arabia’s gross domestic product (GDP) rose for the first time since the start of the Covid-19 pandemic, up by 1.5% year-on-year (y-o-y) in the second quarter (Q2) of 2021, a report said, citing data issued by the General Authority for Statistics (GASTAT).

The seasonally adjusted real GDP expanded 1.1% quarter-on-quarter (q-o-q) in Q2 2021, said leading financial services provider Al Rajhi Capital in a new report.
 
Saudi Arabia’s total revenue reached SR248.1 billion ($66 billion) in the second quarter (Q2) of 2021, a rise of 85% year-on-year (y-o-y), while total expenditures stood at SR252.7 billion, an increase of 4% y-o-y, it added.

The kingdom posted a budget deficit of SR4.6 billion ($1.2 billion) in Q2 as compared with SR7.4 billion in the previous quarter, according to the report.

Money Supply (M3) continued to grow in July 2021 (+9.8% y-o-y) to stand at SR2,251 billion; while M1 and M2 increased 7.5% y-o-y and 6.1% y-o-y, respectively. As per the weekly money supply data by Saudi Central Bank, M3 may be lower in August 2021 than in the month of July.

Credit to the private sector witnessed a growth of 16.4% y-o-y (+0.5% m-o-m) in July 2021; while bank claims on public sector advanced 8.9% y-o-y (+1.0% m-o-m) in the same month. Meanwhile, deposits rose 11.1% y-o-y (+0.5% m-o-m) in July 2021.

Banking sector net profit before Zakat and tax declined 12.8% y-o-y to SR3.76 billion in July. Further, on a monthly basis, the banking sector profits declined by 2.8% m-o-m in July 2021.

Saudi Central Bank’s foreign reserves, on an annual basis, fell 1.4% in July 2021 versus a decline of 0.4% y-o-y in June 2021. Further, the reserves declined 1.0% m-o-m in July 2021 (+2.0% m-o-m in June). Meanwhile, as of July 2021, government reserves with Saudi Central Bank stood at SR440.462 billion (including government current account), a monthly decline of 0.2%.

Point-of-sale (POS) transactions increased 23.3% y-o-y in July 2021 (+4.6% y-o-y in June 2021). However, the ATM cash withdrawals declined by 19.8% y-o-y in July 2021 as compared to the decline of 6.0% in June 2021. The increase in POS transactions was driven by rise in ‘Restaurants & Hotels’,  ‘Transportation’ and  ‘Food & Beverages’ segments increasing 43.9% y-o-y, 23.6% y-o-y and 17.8% y-o-y, respectively.

Remittances (Personal Transfers) by Saudi nationals increased 8.1% y-o-y in July 2021 (+56.0% y-o-y in June 2021). However, growth in remittances by non-Saudi nationals declined 17.7% y-o-y in the same month (-3.4% y-o-y in June 2021).

Index of Industrial Production (IIP) increased 3.6% m-o-m in June 2021, mainly due to increase in mining and quarrying activity (+4.5% m-o-m) and electricity and gas sectors activity (+13.9% m-o-m). However, non-oil manufacturing activity saw m-o-m decline of 0.4%.

Cost of living index increased 0.4% y-o-y in July 2021 as compared to 6.2% y-o-y in June 2021. The impact of the increase of the VAT from 5% to 15% in July 2020 (base effect) fades out in July 2021 and does not affect the annual change of the CPI anymore.

The increase in CPI is mainly originated from higher prices of ‘Transport’ (+7.8% y-o-y) and ‘Food and Beverages’ (+1.2% y-o-y). The increase in ‘Transport’ prices was mainly due to the increase in operating of personal transport equipment prices (+28.7%), which in turn was resulted by the rise in prices of fuels and lubricants (+59.0%).

Further, the rise in ‘Food & Beverages’ was mainly due to the increase in food prices (+1.3%), in particular, the increase in prices of ‘Vegetables’ (+11.2%). On a monthly basis, the CPI rose 0.2% in July (+0.2% m-o-m in June).

Crude oil prices (Brent August futures contract) declined 3.4% MTD in August 2021, as investors remain worried about the outlook for fuel demand as Covid-19 cases surge worldwide. Meanwhile, the Saudi Arabian crude oil production increased 11.6% y-o-y (+5.4% m-o-m), to 9.430mbpd in July 2021, as compared to the increase of 18.9% y-o-y in June.

Crude price outlook: The US Energy Information Administration (EIA) in its August 2021 report showed, Brent crude oil spot prices averaged $75/barrel in July, up $2/barrel from June. Brent prices will remain near current levels for the remainder of 2021, averaging $72/barrel from August through November. Further, Brent prices to average $66/barrel in 2022. – TradeArabia News Service

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