KSA: Robust performance in nonoil private sector

JEDDAH: Key consumption indicators that measure Saudi Arabia’s economic progress continued to soften in April, but remained at healthy levels, say researchers.

But they stressed that PMI data continued to point to a robust performance in the Kingdom’s nonoil private sector, according to economic researchers.
The Tadawul All Share Index (TASI) also fared better than most regional indices during the month.
The nonoil private sector PMI fell to 58.3, down from a six-month high in the previous month, but continued to point to a healthy expansion in output and new orders, said a report from Jadwa Investment.
In monthly terms, the total value of both cash withdrawals and point of 35 sales transactions fell in April, but increased by 7.7 percent, year-on-year, stated Jadwa’s Saudi Chartbook for June 2015.
It said that cement sales continued to post strong growth, 5.0 increasing by 7.1 percent, year-on-year in April.
In April, the report said that net change to government accounts remained negative, month-on-month.
The majority of the fall came from a net negative change in the projects account, which suggests more funds are being spent on capital projects. Foreign reserves declined for the third consecutive month, falling by $11.6 billion to reach $683 billion in April.
In April, net government accounts at SAMA declined for the sixth consecutive
month, falling by $14.3 billion, month-on-month. The majority of the fall came from a net negative change in the projects, which fell by $19.4 billion, month-on-month.
Bank credit to the private sector continued to slow in April, according to the chart book.
In quarterly terms, credit to both consumers and corporates slowed during Q1 2015.
Net real estate credit (issued for new retail loans) also fell by SR4.5 billion (77.2 percent), quarter-on-quarter
This was due to the newly introduced 30 percent down payment requirement on new home-seekers, said the report.
Growth in bank credit to the private sector fell to 0.4 percent, month-on-month. Year-on-year growth is at its lowest in four years, at 9.5 percent.
Q1 2015 credit to both consumers and corporates slowed, year-on-year.
Consumer credit reached 6.7 percent, while corporate credit grew by 11.6 percent, year-on-year.
Year-on-year growth in total bank deposits decreased 8.9 percent, month-on-month.
During April, growth in time 20 and savings deposits fell to its slowest point in eighteen months, reaching 3.7 percent year-on-year.
The combination of slowing 83 credit and deposit growth has led to the loan-to- deposit ratio remaining virtually unchanged, according to the report.
In April, headline inflation stayed unchanged at 2 percent, year-on-year as the rate of inflation slowed for the seventh consecutive month.
The report said that year-on-year housing inflation accelerated to 3.1 percent in April, while foodstuffs fell to 1.3 percent, year-on-year, in April.
However, economists predicted a reversal in year-on-year food prices, particularly since food inflation regularly spikes ahead of Ramadan.
Between 2013 and 2014, Saudi Arabia’s current account surplus fell from $135.5 billion (18.2 percent of GDP) to $81.2 billion (10.8 percent of GDP). This is $25 billion lower than the Finance Ministry’s announcement last December.
Net investment flows into the economy rose by $1 billion during 2014. The increase was due to a $1.8 billion rise in portfolio investment, while foreign direct investment (FDI) fell by $900 million, year-on- year, said the report.
It said that the services account was the major source for growth in payments during 2014, with an annual increase of $20 billion, largely as a result of elevated levels of external financial aid and assistance.
In March, nonoil exports rebounded following three consecutive monthly declines, while nonoil export volumes recorded their highest level in 12 months.
For each of the last 12 months, exports of plastics have consistently been higher than petrochemicals. Imports increased in March, growing by 2.8 percent, year-on-year.
March exports of plastics stood at $1.3 billion, while exports of petrochemicals reached $1.1 billion.
March imports increased by $2 billion, month-on-month. Growth in imports accelerated by 2.8 percent, year-on-year.
STOCK MARKET: A lack of major corporate results and generally lower investor activity during the slower summer months resulted in the TASI’s (Tadawul All_sHare Index) performance being broadly flat, month-on-month, in May.
This was broadly in line with most major global indices. The TASI still fared better than most regional indices during the month.