RIYADH: Saudi Arabia’s money supply grew 5.6 percent year on year in August, while consumer price inflation stood at 1.8 percent, pointing to continued monetary expansion amid relatively contained price pressures, official data showed.

Data from the Saudi Central Bank, also known as SAMA, showed bank credit to the private sector increased 6.1 percent year on year in August, while banks’ claims on the government rose 9.4 percent.

Regional risks weigh on outlook

The monetary indicators come as the International Monetary Fund expects Saudi Arabia’s real gross domestic product growth to slow to 1.7 percent in 2026 before rebounding to 5.5 percent in 2027.

The weaker near-term outlook reflects the impact of the war in the Middle East, disruptions to shipping through the Strait of Hormuz and their potential effects on oil exports, non-oil activity and business confidence, the IMF said.

The fund expects non-oil GDP growth to reach 2.6 percent in 2026 before accelerating to 4.5 percent in 2027. Average consumer-price inflation is projected to rise to 2.2 percent this year from 2 percent in 2025.

The IMF said the outlook remains highly uncertain and will depend largely on the trajectory of the conflict and whether maritime traffic through the Strait of Hormuz returns to normal.

Deposits, reserves and payments rise

The latest data also showed the Wholesale Price Index rose 4.6 percent in August from a year earlier.

Time and savings deposits recorded one of the strongest increases among the monetary indicators, climbing 24.4 percent year on year. Total reserve assets also rose 6.7 percent during the month.

Digital and electronic payments continued to expand, with SADAD payments increasing 12.8 percent year on year and point-of-sale transactions rising 5 percent.

Monetary policy focuses on stability

SAMA raised its repo and reverse repo rates by 25 basis points in September to 4.5 percent and 4 percent, respectively, following a US Federal Reserve rate increase.

The move was aimed at maintaining monetary and exchange-rate stability amid elevated regional economic uncertainty.

In July, the IMF said Saudi Arabia’s banking sector continued to maintain strong capital and liquidity buffers despite heightened uncertainty, leaving banks well positioned to support economic activity and withstand potential shocks.