Saudi Arabian Monetary Authority delivers positive assessment of the Kingdom’s economy
The Saudi Arabian Monetary Authority (SAMA) has published its 55th annual report which reviews the economic and financial developments in the Kingdom during 2018. In its report, SAMA assessed the economic and the banking performance of the Kingdom as fair for last year.
The report said that under balanced economic policies the Saudi economy showed positive developments in most sectors during the year. This robust economic performance benefitted from the economic and financial reform package that was introduced by the government when the Kingdom’s Vision 2030 was announced in April 2016.
The reforms helped the different sectors of the economy to achieve positive developments in 2018, as evidenced by the growth registered in the gross domestic product (GDP) of 2.21 percent to SR2,625.5 billion ($700 billion) in 2018, compared to a decline of 0.74 percent in 2017.
This growth is attributed to the increase in the oil sector GDP by 2.85 percent to SR 1,134.6 billion, and the growth of the non-oil private sector GDP by 1.74 percent to SR1,476.4 billion. Similarly, the non-oil government sector grew by 2.79 percent to SR443.5 billion.
According to SAMA, the total supply of goods and services from the non-oil sector at current prices recorded an increase of 4.64 percent in 2018, while imports showed an increase of 0.51 percent. The non-oil sector GDP output at current prices increased by 5.78 percent, with the government sector non-oil GDP expanding by 10.1 percent and that of the private sector by 3.78 percent.
Despite the fact that commercial banks’ reserves (cash in vault and deposits with SAMA) went down by 8.7 percent to SR218.6 billion and banks’ capital reserves decreased by SR13.7 billion, commercial banks’ profits increased by 10.7 percent.
Banking technology showed a significant improvement in 2018 as the Saudi payment network (Mada) achieved positive growth in all of its operations. The number of withdrawal transactions carried out through Mada rose by 9 percent to 949 million. compared to a rise of 5.9 percent year-on-year.
Also, the value of the Point of Sales (POS) rose by 15.9 percent to SR232.3 billion compared to an increase of 9.7 percent in the preceding year.
I believe that, despite the volatility of the world oil prices over the past year, the Saudi economy continues to grow, as most of the major economic activities have shown positive improvement, evidenced by the GDP growth of 1.66 percent in Q1 of this year, compared to growth of 1.38 percent in the corresponding period in 2018.
It is also expected that with the continuing government economic reforms and financial incentives packages the economy will continue to register positive results for the rest of the year. Undoubtedly, Saudi Vision 2030 will be an aspiration for the national economy to grow and achieve positive results going forward.
Talat Zaki Hafiz is an economist and financial analyst.