Outflow of remittances from KSA grows by 14.9%

Remittance outflows from the Kingdom have risen to a record high so far this year on the back of strengthening dollar and domestic labor market reforms, Jadwa Investment states in its latest Saudi Chartbook.
New data suggest that the Saudi economy picked-up in July, according to Jadwa Investment.
Key indicators of consumer and corporate spending improved in year-on-year and month-on-month terms, it said.
Year-to-July outflow of remittances expanded by 14.9 percent year-on-year.
According to Jadwa, data from Pakistan, one of the largest recipients of remittances, show a record high flow in July.
The main move over August has been the continued weakening of emerging market currencies speculation that the US Federal Reserve will start cutting bond purchases this month.
The return to growth in the euro zone supported the euro against the dollar, though the expected monetary policy change in the US limited the upside, according to Jadwa Investment.
It said bank claims on the private sector slowed in July. This appears related to seasonal factors rather than a change in risk appetite.
Commerce and manufacturing have been the largest recipients of new lending so far this year.
New data also show that lending to individual consumers rose at a much faster pace than lending to companies, according to Jadwa Investment.
It said bank deposits reversed the previous month decline and recorded a small gain in July.
Demand deposits accounted for the entire rise while other deposit categories fell.
Jadwa said the amount of excess bank reserves at SAMA fell to its lowest level since end 2008.
At the same time, it said loan-to-deposit ratio rose to a nine-month high.
The report said elevated oil prices maintained a positive trend for SAMA’s net foreign assets, though the level of accumulation slowed this year on the back of lower oil production.
It said foreign assets of independent government organizations also reached a new high. The government can draw down these assets to finance spending should it require.
Jadwa said year-on-year inflation ticked up in July, driven by an increase in rental and food inflation. The latter recorded the highest year-on-year inflation in four years, partially reflecting normal Ramadan jump.
Inflation for most other components of the cost of living index declined.
The report said non-oil exports rose in June with both petrochemical and plastic rebounding, but imports fell slightly. Both imports and non-oil exports were higher than in June 2012.
New letters of credit opened for imports suggest a recovery in the next few months, according to the chartbook.
Higher-than-expected supply disruption and intensification of conflict in the Middle East have pushed oil prices higher in August.
The report said the Kingdom’s oil production picked up in the last three months, generating elevated oil export revenues.
Cement production and sales declined in line with the seasonal trend, the report said.
After five months of positive performance, the TASI recorded 1.9 percent fall in August.
Jadwa said escalation of the unrest in Syria and the increasing likelihood of a military intervention have weighed the general market sentiment.
Twelve sectors fell in August. In general, those sectors with strong economic fundamentals were among the best performers, while smaller sectors were the worst performers.
Real estate led the declines, dropping by more than 10 percent, followed by insurance and media.