RIYADH: The annual growth in Saudi Arabia’s M3 money supply slowed to 11.3 percent in November but bank credit hit a 13-month high, suggesting that a credit slowdown may be nearing an end.
Bank credit stood at SR723.4 billion ($193 billion) by end-November up from SR722.6 billion in October and SR723.2 billion a year earlier, data from the Saudi Arabian Monetary Agency’s (SAMA) website showed on Monday.
Saudi bank credit growth has been flat throughout much of 2009 as banks remained cautious about lending to corporates due to the global slowdown and defaults by local and regional firms.
Analysts have been expecting the pace of credit growth to pick up by year-end. Credit growth picked up in August with a 2 percent increase, before grinding to a halt in September.
M3, the broadest measure of money circulating in the economy and an indicator for future inflation, stood at SR1,023.2 billion in November up from SR919.3 billion a year earlier and SR1,003.9 billion in October.
The annual growth in M3 was 11.4 percent in October.
Annual inflation reached a 28-month low of 3.5 percent in October, but the government estimated inflation for 2009 to reach 4.4 percent.
Analysts expect inflation to rise by end-2009 mainly due to a chronic housing shortage and weaker US dollar. With stronger oil prices, SAMA’s net foreign assets in November remained almost unchanged compared with the previous month at SR1,459.2 billion but they were below their level a year earlier of SR1,662 billion.
The central bank has said it started drawing on reserves accumulated during years of high oil prices to keep the economy going.